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BlogMMT and the New New Deal
November 20, 2015 Yesterday, Senator Bernie Sanders gave an important speech in which he invoked President Roosevelt’s “Second Bill of Rights” in defense of his platform. As Bernie rightly pointed out, all of Roosevelt’s New Deal social programs to which we have become accustomed were tagged as “socialism”—just as pundits are branding Bernie’s proposals as dangerous socialist ideas. [...] Blog -
Public Policy Brief No. 140The ECB, the Single Financial Market, and a Revision of the Euro Area Fiscal Rules
November 18, 2015 Mario Tonveronachi, University of Siena, builds on his earlier proposal (The ECB and the Single European Financial Market) to advance financial market integration in Europe through the creation of a...more Publication -
Working Paper No. 854The Roads Not Taken
November 16, 2015 Standard presentations of stock-flow consistent modeling use specific Post Keynesian closures, even though a given stock-flow accounting structure supports various different economic dynamics. In this paper we separate the dynamic...more Publication -
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Can Public Money Creation Work? Some Answers from Canadian History
November 13, 2015 by Josh Ryan-Collins The theoretical and policy arguments for monetary reform are becoming more accepted by economists and establishment figures. The financial crisis blew apart the idea that deregulated private money creation by commercial banks leads to more efficient outcomes and allocation of capital, as has been noted by Martin Wolf of the Financial Times [...] Blog -
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New Book on EU Financial Regulation
November 11, 2015 A new volume on EU financial regulation edited by Rainer Kattel, Jan Kregel, and Mario Tonveronachi: Have past and more recent regulatory changes contributed to increased financial stability in the European Union (EU), or have they improved the efficiency of individual banks and national financial systems within the EU? Edited by Rainer Kattel, Tallinn University of Technology, [...] Blog -
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25th Annual Minsky Conference Returns to Blithewood
November 10, 2015 The 2016 Minsky conference will be held here at Blithewood mansion, home of the Levy Institute. Barney Frank will be among the keynote speakers: Will the Global Economic Environment Constrain US Growth and Employment? Organized by the Levy Economics Institute of Bard College with support from the Ford Foundation Levy Economics Institute of Bard College Blithewood Annandale-on-Hudson, [...] Blog -
Working Paper No. 853
Finance, Foreign Direct Investment, and Dutch Disease
November 09, 2015 In recent years, Colombia has grown relatively rapidly, but it has been a biased growth. The energy sector (the “locomotora minero-energetica,” to use the rhetorical expression of President Juan Manuel...more Publication -
Policy Note No. 7Losing Ground
November 04, 2015 US labor force participation has continued to fall in the wake of the Great Recession. Improvements in the US unemployment rate reflect the fact that more people are falling out...more Publication -
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“Why Minsky Matters” Now Available
November 04, 2015 “Hyman Minsky is the most important economist since Keynes, yet it’s virtually impossible to find any books about him.” That’s from Michael Pettis’s blurb for Randy Wray’s new book Why Minsky Matters, which is now shipping: Hyman Minsky’s name has appeared in the popular press a lot more since the financial crisis, but often without much more elaboration [...] Blog -
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Is a “Bad Bank” Model the Solution to Greece’s Credit Crunch?
October 30, 2015 Dimitri Papadimitriou and new Levy Institute Research Associate Emilios Avgouleas write about one of the obstacles to recovery of the Greek economy: the absence of credit expansion in connection with still-troubled Greek banks. Beyond deposit flight and the ongoing recession, Papadimitriou and Avgouleas argue that the botched recapitalization of Greek banks can also be blamed for the failure to alleviate [...] Blog -
Working Paper No. 852
The Malady of Low Global Interest Rates
October 30, 2015 Long-term interest rates in advanced economies have been low since the global financial crisis. However, in the United States the Federal Reserve could begin to hike its policy rate, the...more Publication -
Working Paper No. 851
Money Creation under Full-reserve Banking
October 28, 2015 This paper presents a stock-flow consistent model+ of full-reserve banking. It is found that in a steady state, full-reserve banking can accommodate a zero-growth economy and provide both full employment...more Publication -
Working Paper No. 850
The Macroeconomics of a Financial Dutch Disease
October 28, 2015 We describe the medium-run macroeconomic effects and long-run development consequences of a financial Dutch disease that may take place in a small developing country with abundant natural resources. The first...more Publication -
Working Paper No. 849
Bank Leverage Ratios and Financial Stability
October 23, 2015 Bank leverage ratios have made an impressive and largely unopposed return; they are mostly used alongside risk-weighted capital requirements. The reasons for this return are manifold, and they are not...more Publication -
Working Paper No. 848
Is Monetary Financing Inflationary?
October 23, 2015 Historically high levels of private and public debt coupled with already very low short-term interest rates appear to limit the options for stimulative monetary policy in many advanced economies today....more Publication -
One-Pager No. 50A Public Investment Priority for Job Creation in Turkey
October 22, 2015 This one-pager presents the key findings and policy recommendations of the research project report The Impact of Public Investment in Social Care Services on Employment, Gender Equality, and Poverty: The...more Publication -
Working Paper No. 847
Integration, Spurious Convergence, and Financial Fragility
October 16, 2015 The Spanish crisis is generally portrayed as resulting from excessive spending by households, associated with a housing bubble and/or excessive welfare spending beyond the economic possibilities of the country. We...more Publication -
Working Paper No. 846
Secular Stagnation or Stagnation Policy?
October 09, 2015 The current debate on secular stagnation is suffering from some vagueness and several shortcomings. The same is true for the economic policy implications. Therefore, we provide an alternative view on...more Publication -
Working Paper No. 845
The Euro’s Savior?
September 30, 2015 This study assesses the European Central Bank’s (ECB) crisis management performance and potential for crisis resolution. The study investigates the institutional and functional constraints that delineate the ECB’s scope for...more Publication -
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Kregel on the Vulture Funds
September 28, 2015 Jan Kregel, the Levy Institute’s director of research, was recently interviewed by the Buenos Aires Herald regarding Argentina’s economic prospects and its ongoing situation with the “vulture funds.” On Argentina’s policy challenges: So there are no alternatives to devaluation? Argentina has one net advantage. As a result of the vulture funds it’s relatively insulated from the global crisis. Now [...] Blog -
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Endogenous Financial Fragility in Brazil: Does Brazil’s National Development Bank Reduce External Fragility?
September 22, 2015 by Felipe Rezende Introduction The creation of new sources of financing and funding are at the center of discussions to promote real capital development in Brazil. It has been suggested that access to capital markets and long-term investors are a possible solution to the dilemma faced by Brazil’s increasing financing requirements (such as infrastructure investment [...] Blog -
Research Project ReportThe Impact of Public Investment in Social Care Services on Employment, Gender Equality, and Poverty
September 22, 2015 Produced in partnership with the International Labour Organization, United Nations Development Programme, and UN Women, this report examines the demand-side rationale for a public investment in the social care sector—specifically,...more Publication -
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Reactions to S&P Downgrade: S&P Analyst Confirms There Is No Solvency Issue
September 17, 2015 by Felipe Rezende In previous posts (see here and here), I discussed Standard & Poor’s (S&P) downgrade of Brazil’s long-term foreign currency sovereign credit rating to junk status, that is, to ‘BB+’ from ‘BBB-‘, and its decision to downgrade Brazil’s local currency debt to a single notch above “junk” status. S&P hosted a conference call [...] Blog -
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Credit Rating Agencies and Brazil: Why the S&P’s Rating of Brazil’s Sovereign Debt Is Nonsense
September 13, 2015 by Felipe Rezende So S&P has downgraded Brazil’s rating on long-term foreign currency debt to junk and lowered its long-term local currency sovereign credit rating to ‘BBB-‘ from ‘BBB+’. First, what are sovereign debt ratings? Standard & Poor’s sovereign rating is defined as follows: A current opinion of the creditworthiness of a sovereign government, where [...] Blog