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BlogAre Structural Reforms the Cure for Southern Europe?
September 30, 2013 I have recently signed the “Economists’ Warning” on the situation in the eurozone, which states that It is essential to realise that if the European authorities continue with policies of austerity and rely on structural reforms alone to restore balance, the fate of the euro will be sealed. The Economists’ Warning was published by the [...] Blog -
Working Paper No. 776Δημοσιονομική πολιτική και επανεξισορρόπηση στην ευρωζώνη
September 30, 2013 Το «φρένο χρέους» στη Γερμανία θεωρείται επιτυχημένη πολιτική και ως εκ τούτου λειτουργεί ως πρότυπο για τη ζώνη του ευρώ και το λεγόμενο «δημοσιονομικό σύμφωνο». Στην παρούσα εργασία ασκούμε έντονη...more Publication -
Working Paper No. 776
Fiscal Policy and Rebalancing in the Euro Area
September 30, 2013 The German debt brake is often regarded as a great success story, and has therefore served as a role model for the Euro area and its fiscal compact. In this...more Publication -
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Euroland’s “Recovery” – Three Cheers for Dr Schäuble!
September 30, 2013 (first appeared in Social Europe) Never miss a party – especially one you’ve been desperately waiting for for so long. This much the authorities in Europe’s currency union clearly understand. As soon as Eurostat had released its first estimate for GDP growth in the spring quarter in mid August (1st estimate here), which was missing [...] Blog -
Working Paper No. 775
Wage and Profit-led Growth
September 26, 2013 We argue that a fundamental difference between Post-Keynesian approaches to economic growth lies in their treatment of investment. Kaleckian-Robinsonian models postulate an investment function dependent on the accelerator and profitability....more Publication -
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Does the Fed Have the Tools to Achieve its Dual Mandate?
September 25, 2013 Stephanie Kelton recently sat down with L. Randall Wray to discuss, among other things, the news that the Federal Reserve will refrain for the time being from tapering its asset purchases (QE). Wray took the occasion to elaborate on his view that quantitative easing is ineffective as economic stimulus and that — given the tools [...] Blog -
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Money as Effect
September 24, 2013 Regarding spurious policy arguments about “excessive growth of the money stock”: Ed Dolan posts helpfully to Economonitor on the more realistic approach suggested by the theory of endogenous money. In particular, I took note of the following passage, which brings up a point that I wrote about recently: “Formally, a model that includes a minimum [...] Blog -
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The IMF’s Puzzling Current Account Projections
September 23, 2013 The following table has been computed using data from the latest (April 2013) IMF World Economic Outlook database, with IMF estimates starting in 2013 for most countries. In my view, these projections are based on heroic assumptions and wishful thinking. The eurozone is supposed to improve its position, even though the current account balance of [...] Blog -
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Another Way of Reading the CBO Report
September 20, 2013 On Tuesday, the Congressional Budget Office released its new projections (pdf) for the long-term budget. A Bloomberg article titled “CBO Says Short-Term Deficit Cut Won’t Avert Fiscal Crisis” provided a fairly typical summary: [F]ederal spending will rise from 22 percent of GDP in 2012 to 26 percent in 2038 … The deficit [currently 3.9 percent [...] Blog -
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The Euro: Can’t Live With It … ?
September 19, 2013 As a member of the eurozone, Greece does not control its own currency and therefore cannot devalue said currency in an effort to promote an export-led recovery. Instead, Greece is stuck with the troika’s strategy of internal devaluation: seeking export growth through reducing unit labor costs (wages). As Dimitri Papadimitriou, Michalis Nikiforos, and Gennaro Zezza [...] Blog -
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Fiscal Sadism in Greece
September 17, 2013 In case you missed it, what with all the celebrating going on in the eurozone over the incredible success of austerity policies, the unemployment rate in Greece is now at 27.9 percent and the country is likely on its way to a third bailout. C. J. Polychroniou argues in a new one-pager that offering Greece [...] Blog -
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Janet Yellen on Bubbles and Minsky Meltdowns
September 17, 2013 Back in 2009, Janet Yellen delivered a speech at the Levy Institute’s Minsky conference that explained how the financial crisis had changed her views about the role of central banks in handling financial instability. At the time she was the head of the San Francisco Fed. The focus of her 2009 remarks was the question [...] Blog -
One-Pager No. 42Exit Keynes the Friedmanite, Enter Minsky’s Keynes
September 16, 2013 Perhaps the most indictable offense that mainstream economists committed, from 1988 through 2008, was to retrace Keynes’s path of discovery from 1924 (A Tract on Monetary Reform) through 1936 (The...more Publication -
One-Pager No. 42
Έξω ο Κέυνς ο φριντμανικός, μέσα ο Κέυνς του Μίνσκι
September 16, 2013 Ίσως το πιο σοβαρό και καταδικάσιμο παράπτωμα που διέπραξαν οι καθεστωτικοί οικονομολόγοι την περίοδο 1988-2008 ήταν να επανεξετάσουν, βήμα προς βήμα, την πορεία του Keynes από το 1924 μέχρι το...more Publication -
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Panics in India
September 16, 2013 (The following was written by Sunanda Sen and first appeared at TripleCrisis) A panic of unprecedented order has struck the crisis-ridden Indian economy. It brings to the fore the question of what led to this massive downturn, especially when the country was touted, not long back, as one of the high-growth emerging economies of Asia. [...] Blog -
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Galbraith on Lehman’s Lessons, Five Years On
September 13, 2013 From a panel discussion yesterday at the George Washington University Law School on what we have(n’t) learned since the 2008 financial collapse (via Matias Vernengo). Galbraith begins by cautioning that these “lessons learned” frameworks often leave unchallenged the premise that the crisis is over and done with, when, as he argues, the events of 2008 [...] Blog -
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Waiting for Export-led Growth in Greece
September 12, 2013 The policy strategy being imposed on Greece by its international lenders depends on the success of something called “internal devaluation”: in the absence of being able to devalue its own currency, Greek wages have been cut in the hopes that this generates an export-led economic recovery. So, how is this going? As Dimitri Papadimitriou, Michalis [...] Blog -
Working Paper No. 774
Economic Crises and the Added Worker Effect in the Turkish Labor Market
September 12, 2013 Turkish economic growth has been characterized by periodic crises since financial liberalization reforms were enacted in the early 1990s. Given the phenomenally low female labor force participation rate in Turkey...more Publication -
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The Federal Government Is Not a Large Household or Business
September 11, 2013 The Heritage Foundation presents what one hopes it doesn’t believe is a clever critique of US public finances: Brad Plumer has the inevitable takedown here. This pretty much sums up the inanity of these government-as-household analogies: “Anyway, it’s a good analogy. The U.S. federal government really does resemble your typical money-printing family that owns lots [...] Blog -
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The Global Crisis, a Recovery (?), and the Road Ahead
September 11, 2013 I hope that all of you saw the very nice feature on Wynne Godley in the NYTimes. It is about time he’s getting the notice he deserved. I just came across a juicy quote from Wynne: “I want to say of neoclassical macroeconomics what I have sometimes said of certain kinds of fiction; I know [...] Blog -
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Work and Income as Economic Rights
September 10, 2013 In this video, Pavlina Tcherneva and Philip Harvey look at the job guarantee and basic income grant proposals in the context of a discussion of economic rights. Tcherneva begins with the theory behind the job guarantee — a federally-funded (and in Tcherneva’s version, locally-administered) program that would offer a paid job to anyone willing and [...] Blog -
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Barbera on the Case Against Mainstream Economics
September 06, 2013 Robert Barbera, a regular contributor to the Levy Institute’s Minsky conferences, has a great post at Johns Hopkins’ Center for Financial Economics on the cycle of amnesia and remembrance that seems to plague mainstream economic theorists. Here’s a key passage: Perhaps the most indictable offense that mainstream economists committed, from 1988 through 2008, was to [...] Blog -
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The Low Rates that Saved Wall Street
September 05, 2013 In a new One-Pager, Nicola Matthews sums up some of the findings from her analysis of the activities of the Federal Reserve’s special lending facilities set up during the last financial crisis. She contends that the Fed departed from a classical understanding of what central banks should do in liquidity crises but focuses in particular [...] Blog -
One-Pager No. 40
The Fed Rates that Resuscitated Wall Street
September 04, 2013 Nicola Matthews, University of Missouri–Kansas City, presents the main findings of her research on the Fed’s lending practices following the global financial crisis of 2008. Applying Walter Bagehot’s principles, she...more Publication