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  Strategic Analysis

  Jobless Recovery Is No Recovery: Prospects for the US Economy

  The US economy grew reasonably fast during the last quarter of 2010, and the general expectation is that satisfactory growth will continue in 2011–12. The expansion may, indeed, continue into 2013. But with large deficits in both the government and foreign sectors, satisfactory growth in the medium term cannot be achieved without a major, sustained […]
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  Working Paper No. 656

  Money in Finance

  This paper begins by defining, and distinguishing between, money and finance, and addresses alternative ways of financing spending. We next examine the role played by financial institutions (e.g., banks) in the provision of finance. The role of government as both regulator of private institutions and provider of finance is also discussed, and related topics such […]
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  Working Paper No. 655

  A Minskyan Road to Financial Reform

  In the aftermath of the global financial collapse that began in 2007, governments around the world have responded with reform. The outlines of Basel III have been announced, although some have already dismissed its reform agenda as being too little (and too late!). Like the proposed reforms in the United States, it is argued, Basel […]
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  Working Paper No. 654

  Measuring Macroprudential Risk

  With the Great Recession and the regulatory reform that followed, the search for reliable means to capture systemic risk and to detect macrofinancial problems has become a central concern. In the United States, this concern has been institutionalized through the Financial Stability Oversight Council, which has been put in charge of detecting threats to the […]
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  Working Paper No. 653

  Financial Keynesianism and Market Instability

  In this paper I will follow Hyman Minsky in arguing that the postwar period has seen a slow transformation of the economy from a structure that could be characterized as “robust” to one that is “fragile.” While many economists and policymakers have argued that “no one saw it coming,” Minsky and his followers certainly did! […]
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  Working Paper No. 652

  The Dismal State of Macroeconomics and the Opportunity for a New Beginning

  The Queen of England famously asked her economic advisers why none of them had seen “it” (the global financial crisis) coming. Obviously, the answer is complex, but it must include reference to the evolution of macroeconomic theory over the postwar period—from the “Age of Keynes,” through the Friedmanian era and the return of Neoclassical economics […]
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  Blog

  January Employment Report: Broader Effects of Seasonal Adjustment

  (Click figure to enlarge.) Two Fridays ago, I blogged about some newly released Bureau of Labor Statistics (BLS) data from a monthly household survey. I was surprised later to see that Multiplier Effect was one of only a handful of websites to mention that non-seasonally adjusted data showed vastly different and perhaps more disturbing results [...]
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  Blog

  Mortgage Morass

  The White House remedies for the mortgage meltdown have now been presented. Congress will debate the life extension, death, or rebirth of federal mortgage entities Fannie Mae and Freddie Mac during the coming weeks. When the noise has died down, don’t expect substantial change. But those who hope for genuine financial reform should, nonetheless, listen [...]
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  One-Pager No. 8

  It’s Time to Rein In the Fed

  The economic crisis that has gripped the US economy since 2007 has highlighted Congress’s limited oversight of the Federal Reserve, and the limited transparency of the Fed’s actions. And since a Fed promise is ultimately a Treasury promise that carries the full faith and credit of the US government, the question is, Should the Fed […]
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  Working Paper No. 651

  Unit Labor Costs in the Eurozone

  Current discussions about the need to reduce unit labor costs (especially through a significant reduction in nominal wages) in some countries of the eurozone (in particular, Greece, Ireland, Italy, Portugal, and Spain) to exit the crisis may not be a panacea. First, historically, there is no relationship between the growth of unit labor costs and […]
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  Working Paper No. 651

  Το μοναδιαίο κόστος εργασίας στην ευρωζώνη

  Οι τρέχουσες εισηγήσεις σχετικά με την ανάγκη να μειωθεί το μοναδιαίο κόστος εργασίας (κυρίως μέσω δραστικών μειώσεων των ονομαστικών μισθών) σε ορισμένες χώρες της ευρωζώνης (ειδικότερα στην Ελλάδα, την Ιρλανδία, την Ιταλία, την Πορτογαλία και την Ισπανία) προκειμένου να βγουν από την κρίση οι εν λόγω χώρες μπορεί να μην είναι πανάκεια. Κατ\’ αρχάς, ιστορικά, […]
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  Policy Notes No. 1

  What Happens if Germany Exits the Euro?

  Like marriage, membership in the eurozone is supposed to be a lifetime commitment, “for better or for worse.” But as we know, divorce does occur, even if the marriage was entered into with the best of intentions. And the recent turmoil in Europe has given rise to the idea that the euro itself might also be reversible, and that […]