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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., […]

Working Paper No. 1058

The Origins of the Platonic Approach to Monetary Systems

A monetary approach that combines Chartalism, Nominalism, and Command origins of monetary systems is often deemed to have emerged only recently, while the Aristotelian approach (Commodity, Metallism, and Market origins of monetary systems) is the only one that existed until the end of the eighteenth/early-nineteenth century. In the major studies of the history of monetary […]

Policy Notes

Trump Wins While Americans Vote for Progressive Policies

On November 5, 2024, American voters sent Donald Trump back to the White House. In 2020, he lost his bid for reelection to Joe Biden, after winning in 2016 against Hillary Clinton (but only thanks to the electoral college). This time, however, Trump won the popular vote. All the new energy that surrounded the Harris-Walz campaign […]

Strategic Analysis

Economic Challenges of the New U.S. Administration

On the eve of the 2024 US presidential election, the authors share their latest macroeconomic projections using the Levy Institute’s tailored stock-flow consistent model and evaluate two alternative policy scenarios, depending upon the next occupant of the White House: (1) a significant increase in import tariffs and decrease in the marginal tax rate, and (2) a substantial increase in government expenditure paired with an increase in the marginal tax rate.

Policy Notes

Inflation

Edward Lane surveys some of the main potential contributors to the recent period of elevated inflation rates in the US economy—focusing on supply disruptions, inflation-adjusted consumer spending, and consumer spending attributable to price markups—­and outlines prominent proposals being made by the 2024 presidential candidates that may have an impact on inflation.

Policy Notes No. 1

The Boy Who Cried Wolf About Government Debt

In a New York Times editorial, David Leonhardt recounts Aesop’s apocryphal story about the boy and the wolf, warning that while deficit hawks have so far been wrong, the growing government debt will eventually bite. He reports the economic plans of both presidential candidates would add to the debt that will soon exceed GDP and grow to 130 percent of annual output under a President Harris, or 140 percent with a Trump presidency. The story of the boy and the wolf was a fable, although it was within the realm of possibility. The fable of the debt wolf is not. While there are real world wolves—Leonhardt mentions climate catastrophe and autocratic leaders, and the authors would add rising inequality and the concentration of economic and political power in the hands of billionaires—authors Yeva Nersisyan and L. Randall Wray assert, federal debt is not one of them.

Working Paper No. 1057

Rise and Fall of Mexican Super Peso: Heterodox Perspective versus Orthodoxy

This working paper contrasts the neo-Keynesian and post-Keynesian theories of monetary policy for an open economy, highlighting the irrelevance of the orthodox theory and the explanatory capacity of heterodoxy for an emerging economy such as Mexico. It focuses on the role of the central bank and the case of the Mexican currency during the economic […]

Working Paper No. 1056

Federal Tax Transfers and Demographic Transition: Balancing Equity and Efficiency

Against the backdrop of demographic transition in India, the study highlights the necessity of integrating the elderly population as a critical factor in formula-based intergovernmental fiscal transfers. The demographic transition, characterized by an increasing elderly population, imposes unique fiscal challenges on states, necessitating a revision of transfer formulas to ensure equitable and efficient resource distribution. […]

Wray on DemystifySci: “Tally Sticks, Central Banks, Evolution of Money”

Listen to Senior Scholar L. Randall Wray on Demystify Sci Podcast #288. L. Randall Wray is a long-term proponent of Modern Monetary Theory, a heterodox macroeconomic theory that teaches that the government should not worry about accruing debt, because it is always able to print more money to service that debt.

Tcherneva on Marketplace: “Automation on the Waterfront”

Be sure to check out Institute President Pavlina R. Tcherneva‘s interview with Marketplace Morning Report, where she discusses the recent job openings and labor turnover data on the episode “Automation on the Waterfront.”  

Now Available Worldwide: Finding the Money

Now available worldwide, Finding the Money explores ideas and principles of MMT, following Scholar Stephanie Kelton. The documentary features other Levy Scholars, including L. Randall Wray, Matthew Forstater, Fadhel Kaboub, Pavlina R. Tcherneva, and others. An intrepid group of economists is on a mission to flip our understanding of the national debt – and the nature of […]