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BlogThe power of moral framing
September 14, 2011 Here is an excerpt from the most important article you will read this year, by George Lakoff: Here’s how public intimidation by framing works. The mechanism of intimidation is framing, not just the use of words or slogans, but rather the changing of what voters take as right as a matter of principle. Framing is [...] Blog -
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UK report proposes ring-fencing of retail banking
September 13, 2011 The final report from the Independent Banking Commission (IBC), otherwise known as “the Vickers report,” was published yesterday. There are no big surprises here, and the share prices of UK banks actually increased somewhat. The report supports and strengthens the Basel proposals already underway, and maintains its previous proposal to “ring-fence” the retail part of [...] Blog -
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The American Bits and Pieces Act
September 12, 2011 The AJA is DOA. Via Politico: “House Republicans may pass bits and pieces of President Barack Obama’s jobs plan, but behind the scenes, some Republicans are becoming worried about giving Obama any victories — even on issues the GOP has supported in the past.” For Thomas Masterson’s extensive treatment of the proposed American Jobs Act [...] Blog -
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Off the Charts
September 12, 2011 “Through several recessions and recoveries, inflation-adjusted GDP rose almost in tandem with a line of predicted growth expectations. But in November 2007, something changed. Real GDP dropped down from what was expected by more than 11 percent, and, as this summer’s data has shown, it hasn’t returned to its pre-recession trend. The unusual slump has [...] Blog -
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The American Jobs Act. sigh.
September 09, 2011 Well, I commented last night on President Obama’s speech to Congress on WGXC, my local radio station. I thought it worth putting down my thoughts on silicon, since I’ve already done all the thinking about it. First of all, I thought that the delivery was one of the better that I’ve heard from President Obama [...] Blog -
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Creating Millions of Jobs on a Shoestring
September 08, 2011 Expect one thing from President Obama’s speech on Thursday: a mini ARRA, a smaller version of essentially the same stimulus plan as that of 2009. He will probably call for putting the unemployed construction workers to work on infrastructure projects, he will propose tax incentives to firms to hire the unemployed, he will keep pushing [...] Blog -
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Going Big
September 08, 2011 Leading up to today’s jobs speech the internal debates in the administration (or so the leaks tell us) have been over whether to propose something minimal that might have a chance of passing, or something bold, knowing that nothing has a chance of getting through Congress anyway. Randall Wray and Stephanie Kelton demonstrate what it [...] Blog -
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WaPo on recession gender gap
September 07, 2011 In a post on Ezra Klein’s blog entitled “The recession’s gender gap: from ‘man-cession’ to ‘he-covery’,” Suzie Khimm notes that the recovery is happening for men but not so much for women. She quotes an Institute for Women’s Policy Research paper that refers to our research, found in this policy brief. Early childhood education and [...] Blog -
Working Paper No. 685Quantitative Easing, Functional Finance, and the “Neutral” Interest Rate
September 07, 2011 The main purpose of this study is to explore the potential expansionary effect stemming from the monetization of debt. We develop a simple macroeconomic model with Keynesian features and four...more Publication -
Working Paper No. 684
Central Banking in an Era of Quantitative Easing
September 07, 2011 This paper reviews the key insights of Hyman P. Minsky in arguing why finance cannot be left to free markets, drawing on the East Asian development experience. The paper suggests...more Publication -
Working Paper No. 683
Permanent and Selective Capital Account Management Regimes as an Alternative to Self-Insurance Strategies in Emerging-market Economies
September 07, 2011 Currency market intervention–cum–reserve accumulation has emerged as the favored “self-insurance” strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly...more Publication -
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The world’s debt trap
September 06, 2011 “There’s a 60 percent probability that most advanced economies will fall into a recession, while authorities are running out of options to provide emergency support.” — Bloomberg News today, describing the views of Nouriel Roubini This forecast from a sometimes-prescient and widely quoted economist brings to mind a question that many people now find irrelevant. [...] Blog -
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Hot Porridge and More Fiscal Stimulus
September 06, 2011 Economist: “The economists who studied this were quite surprised to find that fiscal policy in recessions was reasonably effective. It is just that folks tried a first punch that was too light and that generally we didn’t get big measures until well into the recession.” Congressman: “That is precisely my point. That is why I [...] Blog -
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Job Creation Ideas in HuffPo
September 02, 2011 Thomas Masterson and Pavlina Tcherneva were interviewed by the Huffington Post for an article on job creation policy. Tcherneva discussed the idea of a modern-day WPA, echoing a call she made at the outset of the Obama administration (in this policy note) for the government to provide an explicit employment guarantee targeting the unemployed. Masterson [...] Blog -
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Mandelbrot and the August S&P 500 close
September 02, 2011 According to wsj.com, the S&P 500 stock price index stood at 1,218.89 at the close of the trading day on Wednesday afternoon, after a month that saw much turmoil in the financial markets. Combining monthly data from the website for Robert Shiller’s book Irrational Exuberance with the average unadjusted closing value for August (closes from [...] Blog -
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Consequences of a Eurozone Breakup, German Edition
September 01, 2011 Conversations surrounding eurozone disintegration have largely focused on the prospect of Greece making its exit, but the publication of this Hans-Olaf Henkel op-ed in the Financial Times puts the possibility of a German departure front and center. For an analysis of the consequences should Germany revert to a national currency, see this Levy Institute policy [...] Blog -
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Stimulus funds, pens, and socks: where do they go?
August 31, 2011 All to the same place? You might be excused for thinking so after perusing Tyler Cowen’s post Why didn’t the stimulus create more jobs?, but you would be wrong. First let’s look at Cowen’s post for some obvious red flags. About the number of people hired using stimulus funds who were already employed, Cowen says: [...] Blog -
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A Just-So Story About Money
August 31, 2011 From an intriguing interview with David Graeber, author of Debt: The First 5,000 Years, regarding the history of money and debt: Yes there’s a standard story we’re all taught… It really deserves no other introduction: according to this theory all transactions were by barter. “Tell you what, I’ll give you twenty chickens for that cow.” [...] Blog -
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Who Needs Free Lunch Anyway?
August 30, 2011 There appears to be a standoff brewing over renewal of the federal gas tax. The tax traditionally funds highway infrastructure projects and is due to be extended September 30th. But a group in Congress, led by Senator Tom Coburn, is maneuvering to block the extension. A delay of just ten days, Ron Klain writes in [...] Blog -
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How many Social Security checks fit inside one tax break?
August 30, 2011 The Congressional deficit reduction committee has numerous government programs on the chopping block, and we may soon see some very severe spending reductions. The committee must agree upon, and Congress must pass, $1.2 trillion in spending cuts and/or tax increases by November 23, or automatic, across-the-board spending cuts will go into effect in 2013. I [...] Blog -
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Automatic Stabilizer Fail
August 26, 2011 If you believe the US political system is incapable of handling counter-cyclical policy and that we need to rely on automatic stabilizers, this CBPP graph is depressing: In other words, Temporary Assistance for Needy Families (the result of the 1996 “welfare reform”), for whatever its other merits might be, has not been particularly sensitive to [...] Blog -
Public Policy Brief No. 119The Contradictions of Export-led Growth
August 25, 2011 The export-led growth paradigm is a development strategy aimed at growing productive capacity by focusing on foreign markets. It rose to prominence in the late 1970s and became part of...more Publication -
Public Policy Brief No. 119
Οι αντιφάσεις της εξαγωγικής ανάπτυξης
August 25, 2011 Το μοντέλο της εξαγωγικής ανάπτυξης είναι μια αναπτυξιακή στρατηγική που στοχεύει σε αυξανόμενη παραγωγική ικανότητα εστιάζοντας στις ξένες αγορές. Κυριάρχησε προς το τέλος της δεκαετίας του ’70 και έγινε μέρος...more Publication -
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MMT and Hyperinflation
August 24, 2011 (via EconoMonitor) In last week’s post, I responded to Paul Krugman’s critique of Modern Money Theory (MMT), which argues that a sovereign government that issues its own floating exchange rate currency cannot face an affordability constraint—which means it cannot be forced into involuntary default on its own currency debt. His criticisms really boiled down to [...] Blog