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Public Policy Brief No. 111Deficit Hysteria Redux?
This brief by Yeva Nersisyan and Senior Scholar L. Randall Wray argues that deficits do not burden future generations with debt, nor do they crowd out private spending. The authors base their conclusions on the premise that a sovereign nation with its own currency cannot become insolvent, and that government financing is unlike that of […] -
Working Paper No. 597Bretton Woods 2 Is Dead, Long Live Bretton Woods 3?
This paper sets out to investigate the forces and conditions that led to the emergence of global imbalances preceding the worldwide crisis of 2007–09, and both the likelihood and the potential sustainability of reemerging global imbalances as the world economy recovers from that crisis. The “Bretton Woods 2” hypothesis of sustainable global imbalances featuring a […] -
Public Policy Brief No. 111
Επιστροφή στην υστερία του ελλείμματος στις ΗΠΑ;
Στο κείμενο αυτό, οι Yeva Nersisyan και ο L. Randall Wray υποστηρίζουν ότι τα ελλείμματα δεν επιβαρύνουν τις μελλοντικές γενεές με χρέη και δεν περιορίζουν τις ιδιωτικές δαπάνες. Οι συγγραφείς βασίζουν τα συμπεράσματά τους στην υπόθεση ότι ένα κυρίαρχο κράτος με δικό του νόμισμα δεν μπορεί να χρεοκοπήσει και στην άποψη ότι η κρατική χρηματοδότηση […] -
BlogEuropean Union’s mega-loan fund is no panacea
From the way markets reacted, the trillion-dollar rescue package hurled by European leaders at the continent’s growing debt crisis might well have been code-named Panacea. Stocks rose all over the place while Greek bond yields tumbled on Monday. But this is far from the end of the story. The rescue package alleviated the growing Eurozone [...] -
Blog
Not just jobs, but the right kind
The good news on U.S. employment is that we added 290,000 nonfarm jobs in April. The bad news is that unemployment rose as well, to 9.9%, because more people entered the labor force and many more returned to seeking work. So unfortunately, the employment picture remains grim, with a level of unemployment we might have [...] -
Monetary Economics: An Integrated Approach to Credit, Money, Income, Production, and Wealth
The work of Wynne Godley and Marc Lavoie offers a novel approach, based on a consistent accounting methodology relating stocks and flows, and making use of Post-Keynesian behavioural assumptions that tie the analysis to a monetary economics perspective. The authors’ objective is to provide an analytical framework that could provide an alternative to the standard […] -
Working Paper No. 596
Infinite-variance, Alpha-stable Shocks in Monetary SVAR
The process of constructing impulse-response functions (IRFs) and forecast-error variance decompositions (FEVDs) for a structural vector autoregression (SVAR) usually involves a factorization of an estimate of the error-term variance-covariance matrix V. Examining residuals from a monetary VAR, this paper finds evidence suggesting that all of the variances in V are infinite. Specifically, this study estimates […] -
Working Paper No. 595
The Recycling Problem in a Currency Union
The recycling problem is general, and is not confined to a multicurrency setting: whenever there are surplus and deficit units—that is, everywhere—adjustment in real terms can be either upward or downward. The question is, Which? An attempt is made to formulate the problem in terms of the European Monetary Union. While the problem seems clear, […] -
Working Paper No. 594
Revisiting “New Cambridge”: The Three Financial Balances in a General Stock-flow Consistent Applied Modeling Strategy
This paper argues that modified versions of the so-called “New Cambridge” approach to macroeconomic modeling are both quite useful for modeling real capitalist economies in historical time and perfectly compatible with the “vision” underlying modern Post-Keynesian stock-flow consistent macroeconomic models. As such, New Cambridge–type models appear to us as an important contribution to the tool […] -
Blog
A crisis of evasion
I’m Italian, and I’m an economist, so as European leaders work feverishly to save the Euro, I’ve been wondering: what would happen if the feared contagion occured and my own country saw its finances melt down just as Greece’s have? The short answer is that this would generate a fatal shock to the Euro, given the size [...] -
Working Paper No. 593
A Contribution to the Theory of Financial Fragility and Crisis
The paper examines three aspects of a financial crisis of domestic origin. The first section studies the evolution of a debt-financed consumption boom supported by rising asset prices, leading to a credit crunch and fluctuations in the real economy, and, ultimately, to debt deflation. The next section extends the analysis to trace gradual evolution toward […] -
Blog
Employment report: a mixed bag, but stimulus is helping
The Bureau of Labor Statistics released its monthly Employment Situation Report this morning. The headlines will announce an increase of 290,000 in nonfarm payroll employment and a jump in the unemployment rate to 9.9%. While employment grew, the labor force grew faster than usual, with 195,000 lured back into looking for work by better prospects [...]