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Working Paper No. 1069Tax Credits Are Industrial Policy
Originally issued as EDI Working Paper No. 19, March 2024 The Inflation Reduction Act (IRA) is criticized for “derisking” private investment by increasing the gains to private firms. The derisking critique argues that the IRA insufficiently disciplines private firms; it does not utilize legal or financial penalties which would force firms to undertake green investment […] -
Working Paper No. 1068
Monetary Power and Vulnerability to Sovereign Debt Crises
Originally issued as EDI Working Paper No. 17, March 2024 This paper challenges the prevailing view in the sovereign debt literature by arguing that sovereign debt markets, in many respects, behave similarly to other credit markets. These markets are hierarchical rather than flat, inherently hybrid in nature, blending elements of public order and private markets, […] -
Working Paper No. 1067
Revisiting the Foreign Debt Problem and the “External Constraint” in the Periphery
Originally issued as EDI Working Paper No. 16, March 2024 Most debates and policy proposals about Global South countries’ external debt problem take for granted the view that it is normal for their governments to issue debts denominated in foreign currencies. This paper tries to challenge this widely held and usually unquestioned assumption by relying […] -
Working Paper No. 1066
Job Guarantee Program and the Kaleckian Dilemma
Originally issued as EDI Working Paper No. 10, November 2023 Minsky (1965) has presented the Job Guarantee program as a recommendation in the war against unemployment and poverty. Kalecki (1943), on the other hand, argued that the full employment situation could be technically feasible but politically hard to implement due to the class struggle, resulting […] -
Working Paper No. 1065
Resource Constraints and Economic Policy
Originally issued as EDI Working Paper No. 09, 2023 This paper explains the MMT approach for evaluating the affordability of spending programs, contrasting it with the mainstream approach. Using the examples of the Green New Deal, Medicare-for-All, and Build Back Better, it argues that rethinking spending and taxes as claims on, and releases of resources, […] -
Working Paper No. 1064
Seismic Shifts in Economic Theory and Policy from the Bernanke Doctrine to Modern Money Theory
Originally issued as EDI Working Paper No. 08, 2022 This paper evaluates the relationship between monetary and fiscal policy and the relative effectiveness of macroeconomic stabilization through the lens of Modern Money Theory (MMT). We articulate previously-neglected aspects of monetary sovereignty to offer a new interpretation of the Bernanke Doctrine that emerged in the wake of […] -
New Assistantship in Labor Studies
The Research Assistantship in Labor Studies provides support to Levy Institute graduate students to conduct research on issues of employment, unemployment, and fiscal policy. Applicants who are awarded this assistantship will also engage with the work and unpublished papers of Robert Prasch, a longtime friend of the Institute and scholar of institutional thought and labor issues. Made possible […] -
Working Paper No. 1063
Fiscal and Monetary Policy in an SFC Model of the Italian Economy
Following the Great Financial Crisis of 2008–9, there has been a shift in mainstream economic policy modeling toward “realism,” with dynamic stochastic general equilibrium (DSGE) models partly diverging from the representative agent framework, and large-scale, New-Keynesian structural models addressing real-financial interactions in greater detail. Still, the need for tractability of the former, and the lack […] -
Working Paper No. 1062
The Value of Money
This paper examines heterodox theories of the determinants of the value of money. Orthodox approaches that tie money’s value to relative scarcity of money or to the price level are rejected as inconsistent with the monetary theory of production embraced by heterodox traditions linked to Marx, Veblen, and Keynes. This paper examines and integrates (1) […] -
Working Paper No. 1061
Modern Money Theory on Fiscal and Monetary Policies
Originally issued as EDI Working Paper No. 04, 2022 Drumetz and Pfister make several claims about the inadequacy and fallacies of Modern Money Theory (MMT) and conclude that MMT is nothing more than a political manifesto; there are no theoretical and empirical foundations behind it. This paper addresses this last point by focusing on the […] -
Working Paper No. 1060
The Job Guarantee
Originally issued as EDI Working Paper No. 02, 2022 Orthodox economic theory presents the policy maker with an impossible choice: eradicate unemployment at the cost of undesirable inflation or keep prices stable by maintaining some level of involuntary unemployment. This is the canon, as embodied in the natural rate of unemployment theory and the Non-Accelerating […] -
Working Paper No. 1059
Three Lessons from Government Spending and the Post-Pandemic Recovery
Originally issued as EDI Working Paper No. 01, 2021 The central lesson of the COVID-19 fiscal response is that money is not scarce. Without delay, governments around the world appropriated budgets that dwarfed any other postwar crisis policy. In 2020, Japan passed a stimulus package equal to 54.8 percent of GDP, while in the U.S., […]