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  Book Series

  Why Minsky Matters: An Introduction to the Work of a Maverick Economist

  Perhaps no economist was more vindicated by the global financial crisis than Hyman P. Minsky (1919–1996). Although a handful of economists raised alarms as early as 2000, Minsky’s warnings began a half century earlier, with writings that set out a compelling theory of financial instability. Yet even today he remains largely outside mainstream economics; few […]
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  Policy Notes No. 7

  Losing Ground

  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 of the labor force, not a stronger labor market. Controlling for changes in the demographic makeup of the workforce (i.e., gender, age, education, and race), […]
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  Blog

  “Why Minsky Matters” Now Available

  “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 [...]
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  Blog

  Is a “Bad Bank” Model the Solution to Greece’s Credit Crunch?

  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 [...]
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  Working Paper No. 852

  The Malady of Low Global Interest Rates

  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 federal funds target rate, before the end of the year. In the United Kingdom, the Bank of England could follow suit. What is the outlook […]
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  Policy Notes No. 6

  What Should Be Done with Greek Banks to Help the Country Return to a Path of Growth?

  The recapitalization of Greek banks is perhaps the most critical problem for the Greek state today. Despite direct cash infusions to Greek banks that have so far exceeded €45 billion, with corresponding guarantees of around €130 billion, credit expansion has failed to pick up. There are two obvious reasons for this failure: first, the massive […]
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  Working Paper No. 851

  Money Creation under Full-reserve Banking

  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 and zero inflation. Furthermore, a money creation experiment is conducted with the model. An increase in central bank reserves translates into a two-thirds increase in […]
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  Working Paper No. 850

  The Macroeconomics of a Financial Dutch Disease

  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 move is in financial markets. An initial surge in foreign direct investment targeting natural resources sets in motion a perverse cycle between exchange rate appreciation […]
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  Working Paper No. 849

  Bank Leverage Ratios and Financial Stability

  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 limited to the fact that bank equity levels in the wake of the global financial crisis (GFC) were exceptionally thin, necessitating a string of costly […]
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  Working Paper No. 848

  Is Monetary Financing Inflationary?

  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. One option that has not yet been considered is monetary financing by central banks to boost demand and/or relieve debt burdens. We find little empirical […]
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  One-Pager No. 50

  A Public Investment Priority for Job Creation in Turkey

  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 Turkish Case, which examines the demand-side rationale for a public investment in the social care sector in Turkey—specifically, early childhood care and preschool education (ECCPE)—by […]
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  MME, October 18, 2015