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  Public Policy Brief No. 71

  Can Monetary Policy Affect the Real Economy?

  Central bankers and many economists have abandoned “activist” policies and monetarism and adopted in their place a new view of the role of monetary policy. This view draws on many of the tenets of more traditional theories of money—monetarism’s emphasis on inflation control and skepticism about the use of easy-money policies to permanently increase output, […]
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  Public Policy Brief Highlight No. 71

  Can Monetary Policy Affect the Real Economy?

  Central bankers and many economists have abandoned “activist” policies and monetarism and adopted in their place a new view of the role of monetary policy. This view draws on many of the tenets of more traditional theories of money—monetarism’s emphasis on inflation control and skepticism about the use of easy-money policies to permanently increase output, […]
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  Working Paper No. 370

  Testing for Financial Contagion between Developed and Emerging Markets during the 1997 East Asian Crisis

  This paper examines whether, during the 1997 East Asian crisis, there was any contagion from the four largest economies in the region (Thailand, Indonesia, Korea, and Malaysia) to a number of developed countries (Japan, the United States, the United Kingdom, Germany, and France). Following Forbes and Rigobon (2002) and Rigobon (2003), we test for contagion […]
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  Working Paper No. 369

  On the Effectiveness of Monetary Policy and Fiscal Policy

  Within the framework of macroeconomic policy and theory over the past 20 years or so, a major shift has occurred regarding the relative importance given of monetary policy versus fiscal policy. The former has gained considerably in stature, while the latter is rarely mentioned. Further, monetary policy no longer focuses on attempts to control some […]
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  Working Paper No. 368

  How Far Can US Equity Prices Fall under Asset and Debt Deflation

  Equity prices have been falling since March 2000. How far can they fall before they reach bottom? The current bear market differs from the mid-1970s plunge in equity prices in terms of the causes and, consequently, the factors that should be monitored to test its progress. In the 1970s, the bear market was caused by […]
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  Policy Notes No. 1

  The Big Fix

  Keynesian economics is back. As John Maynard Keynes stressed, total spending matters—and not who does it or for what purpose. Tax cuts and deficit spending are, therefore, on the agenda; low interest rates seem here to stay. Stimulus is the watchword of the day. It remains only to fill in the details, or so it […]
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  Summary No. 4

  Summary Fall 2003

  A new Policy Note summarized under the Financial Markets and Monetary Policy program outlines Germany’s poor economic record since unification. Author J�rg Bibow warns that the "German disease" (protracted policy-inflicted domestic demand stagnation) and the threat of a deflationary spiral are spreading throughout the Economic and Monetary Union (EMU).   Contents: Institute Research – Program: […]
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  Summary No. 3

  Summary Summer 2003

  In a new Strategic Analysis, Distinguished Scholar Wynne Godley argues that personal debt levels in the United States cannot continue and that the country’s balance of payments deficit has largely been ignored by both the government and the public. Godley foresees an era of growth recession characterized by rising unemployment—and the risk of financial implosion. […]
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  Summary No. 2

  Summary Spring 2003

  The latest Strategic Analysis by the Institute’s Macro-Modeling Team shows that the growth rate of private sector debt is unsustainable. The domestic economy is headed for a period of growth recession that can be offset only by a fiscal stimulus from the government sector, the authors say, and by increasing net export demand. Contents: The […]
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  Summary No. 1

  Summary Winter 2003

  In this issue: Senior Scholar James K. Galbraith, in a new Policy Note, argues that conditions attached to an International Monetary Fund loan to Brazil are a form of blackmail that will deflate the Brazilian economy and lead to further loans until the private foreign sector is safely divested of its Brazilian holdings.   Contents: […]
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  Working Paper No. 367

  The Persistence of Hardship over the Life Course

  This paper focuses on the persistence of hardship from middle age to old age. Proposed status maintenance models suggest that stratification of economic status occurs over the life course (for example, little mobility is seen within the income distribution). Some studies have found evidence to support this, but none have looked at broader measures of […]
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  Working Paper No. 366

  Why the Tobin Tax Can Be Stabilizing

  This paper clarifies why a transaction tax of the type proposed by James Tobin can have a stabilizing influence in financial markets. It argues that such a tax is potentially stabilizing, not because it reduces the “excessive” volume of transactions, but because it can slow the speed with which market traders react to price changes. […]