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  One-Pager No. 7

  Reserve Currencies and the Dollar’s Role in Containing Global Imbalances

  The stability of the international reserve currency’s purchasing power is less a question of what serves as that currency and more a question of the international adjustment mechanism, as well as the compatibility of export-led development strategies with international payment balances. Export-led growth and free capital flows are the real causes of sustained international imbalances. […]
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  One-Pager No. 6

  Minsky’s View of Capitalism and Banking in America

  Before we can reform the financial system, we need to understand what banks do—or, better yet, what banks should do. Senior Scholar L. Randall Wray examines Hyman Minsky’s views on banking and the proper role of the financial system—not simply to finance investment in physical capital but to promote the “capital development” of the economy […]
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  Working Paper No. 637

  Financial Stability, Regulatory Buffers, and Economic Growth

  Over the past 40 years, regulatory reforms have been undertaken on the assumption that markets are efficient and self-corrective, crises are random events that are unpreventable, the purpose of an economic system is to grow, and economic growth necessarily improves well-being. This narrow framework of discussion has important implications for what is expected from financial […]
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  Working Paper No. 636

  Bernanke’s Paradox: Can He Reconcile His Position on the Federal Budget with His Recent Charge to Prevent Deflation?

  This paper examines Federal Reserve Chairman Ben Bernanke’s recipe for deflation fighting and the specific policy actions he took in the aftermath of the 2008 financial crisis. Both in his academic and in his policy work, Bernanke has made the case that monetary policy is able to stem deflationary forces largely because of its “fiscal […]
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  Policy Notes No. 4

  A New “Teachable” Moment?

  A common refrain heard from those trying to justify the results of the recent midterm elections is that the government’s fiscal stimulus to save the US economy from depression undermined growth, and that fiscal restraint is the key to economic expansion. Research Associate Marshall Auerback maintains that this refrain stems from a failure to understand […]
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  One-Pager No. 5

  Preventing Another Crisis

  There is no justification for the belief that cutting spending or raising taxes by any amount will reduce the federal deficit, let alone permit solid growth. The worst fears about recent stimulative policies and rapid money-supply growth are proving to be incorrect once again. We must find the will to reinvigorate government and to maintain […]
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  Working Paper No. 635

  International Trade Theory and Policy

  This paper provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical […]
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  One-Pager No. 4

  Is the Eurozone Doomed?

  The trillion-dollar rescue package European leaders aimed at the continent’s growing debt crisis in May might well have been code-named Panacea. Stocks rose throughout the region, but the reprieve was short-lived: markets fell on the realization that the bailout would not improve government finances going forward. The entire rescue plan rests on the assumption that […]
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  One-Pager No. 4

  Είναι καταδικασμένη η ευρωζώνη;

  Το ενός τρισεκατομυρρίων δολαρίων πακέτο διάσωσης που προώθησαν οι ευρωπαίοι ηγέτες τον Μαη του 2010 και που στοχεύει στην αντιμετώπιση της αυξανόμενης κρίση χρέους της ηπείρου, θα μπορούσε κάλλιστα να φέρει το κωδικό όνομα Πανάκεια. Ανέβηκαν οι μετοχές σε όλη την επικράτεια και έπεσαν ακόμη και τα επιτόκια για τα ελληνικά ομόλογα. Η ανάπαυλα όμως […]
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  Blog

  When Monetary Policy Pushes Hard

  With the recent announcement of QE2 (quantitative easing 2), the Federal Reserve’s new round of long-maturity asset purchases, it is worth looking at some of the effects of QE1. In November 2008, the Fed announced large-scale purchases of mortgage-backed securities and debt issued by the GSEs. Its securities holdings began to climb sharply in early [...]
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  Blog

  A Minskian Explanation of the Causes of the Current Crisis

  In recent weeks, the explanation for the financial and economic crisis that has gripped the world economy has shifted sharply from deregulation and lack of governmental oversight of financial institutions to fraud and criminal activity. In truth, the US Federal Bureau of Investigation began to warn of an “epidemic” of mortgage fraud back in 2004, [...]
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  Working Paper No. 634

  How Brazil Can Defend Against Financialization and Keep Its Economic Surplus for Itself

  The post-1945 mode of global integration has outlived its early promise. It has become exploitative rather than supportive of capital investment, public infrastructure, and living standards. In the sphere of trade, countries need to rebuild their self-sufficiency in food grains and other basic needs. In the financial sphere, the ability of banks to create credit […]