The Fall Summary provides an overview of the annual Minsky Conference, which was held in April in New York City with support from the Ford Foundation. Titled “After the Crisis: Planning a New Financial Structure,” the conference focused on many Minskyan themes, including the reconstitution of the financial structure, the reregulation and supervision of financial institutions, the moral hazard of the “too big to fail” doctrine, and the economics of the “big bank” and “big government.” In addition, participants considered central bank exit strategies. A related policy note asserts that the late Wynne Godley’s financial balances approach should be the workhorse of discussions on global rebalancing.

INSTITUTE RESEARCH

Program: The State of the US and World Economies

• 19th ANNUAL HYMAN P. MINSKY CONFERENCE
• After the Crisis: Planning a New Financial Structure
• JAMES K. GALBRAITH, The Great Crisis and the American Response
• DIMITRI B. PAPADIMITRIOU, L. RANDALL WRAY, and YEVA NERSISYAN, Endgame for the Euro? Without Major Restructuring, the Eurozone Is Doomed
• DIMITRI B. PAPADIMITRIOU and GREG HANNSGEN, Debts, Deficits, Economic Recovery, and the US Government
• PAUL MCCULLEY, Global Central Bank Focus: Facts on the Ground
• JÖRG BIBOW, Global Imbalances, the US Dollar, and How the Crisis at the Core of Global Finance Spread to “Self-Insuring” Emerging Market Economies
• CLAUDIO H. DOS SANTOS and ANTONIO C. MACEDO E SILVA, Revisiting “New Cambridge”: The Three Financial Balances in a General Stock-flow Consistent Applied Modeling Strategy
• G. E. KRIMPAS, The Recycling Problem in a Currency Union
• JÖRG BIBOW, Bretton Woods 2 Is Dead, Long Live Bretton Woods 3?
• YEVA NERSISYAN and L. RANDALL WRAY, Does Excessive Sovereign Debt Really Hurt Growth? A Critique of This Time Is Different, by Reinhart and Rogoff

Program: Monetary Policy and Financial Structure

• YEVA NERSISYAN and L. RANDALL WRAY, Deficit Hysteria Redux? Why We Should Stop Worrying about US Government Deficits
• LUIZ CARLOS BRESSER-PEREIRA, The Global Financial Crisis and a New Capitalism?
• AMIT BHADURI, A Contribution to the Theory of Financial Fragility and Crisis
• BERNARD SHULL, Too Big to Fail in Financial Crisis: Motives, Countermeasures, and Prospects
• JAN KREGEL, Fiscal Responsibility: What Exactly Does It Mean?
• GARY A. DYMSKI, Three Futures for Postcrisis Banking in the Americas: The Financial Trilemma and the Wall Street Complex
• ÉRIC TYMOIGNE, Detecting Ponzi Finance: An Evolutionary Approach to the Measure of Financial Fragility

Program: Gender Equality and the Economy

• LEKHA S. CHAKRABORTY, Determining Gender Equity in Fiscal Federalism: Analytical Issues and Empirical Evidence from India
• FATMA GÜL ÜNAL, MIRJANA DOKMANOVIC, and RAFIS ABAZOV, The Economic and Financial Crises in CEE and CIS: Gender Perspectives and Policy Choices
• RANIA ANTONOPOULOS and EMEL MEMIS, Time and Poverty from a Developing Country Perspective

Program: Employment Policy and Labor Markets

• CHARLES J. WHALEN, Economic Policy for the Real World

Program: Immigration, Ethnicity, and Social Structure

• SANJAYA DESILVA, ANH PHAM, and MICHAEL SMITH, Racial Preferences in a Small Urban Housing Market: A Spatial Econometric Analysis of Microneighborhoods in Kingston, New York

Program: Economic Policy for the 21st Century

Explorations in Theory and Empirical Analysis
•  GREG HANNSGEN, Infinite-variance, Alpha-stable Shocks in Monetary SVAR

INSTITUTE NEWS

• The Hyman P. Minsky Summer Seminar and Conference, June 19–29, 2010
• Upcoming Event: The 2011 Hyman P. Minsky Summer Seminar
• New Research Associate

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars
• Recent Levy Institute Publications

Download Volume 19, No. 3 PDF (379.71 KB)

In this new policy brief, President Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen evaluate the current path of fiscal deficits in the United States in the context of government debt and further spending, economic recovery, and unemployment. They are adamant that there is no justification for the belief that cutting spending or raising taxes by any amount will reduce the federal deficit, let alone permit solid growth. The worst fears about recent stimulative policies and rapid money-supply growth are proving to be incorrect once again. In the authors’ view, we must find the will to reinvigorate government and to maintain Keynesian macro stimulus in the face of ideological opposition and widespread mistrust of government.

Download Public Policy Brief Highlights No. 114A, 2010 PDF (220.81 KB)

Στο νέο αυτό κείμενο δημόσιας πολιτικής, ο Πρόεδρος Δημήτρης Β. Παπαδημητρίου και ο Ερευνητικός Μελετητής Greg Hannsgen αξιολογούν τη σημερινή πορεία των δημοσίων ελλειμμάτων στις Ηνωμένες Πολιτείες στο πλαίσιο του κυβερνητικού χρέους και των δαπανών, της οικονομικής ανάκαμψης και της ανεργίας. Είναι ανένδοτοι ότι δεν υπάρχει τεκμηρίωση για την πεποίθηση ότι η μείωση δαπανών ή η αύξηση φόρων σε οποιοδήποτε κλίμακα θα μειώσει το ομοσπονδιακό έλλειμμα, πόσο μάλλον ότι θα οδηγήσει την οικονομία σε σταθερή ανάπτυξη. Οι μεγάλοι φόβοι σχετικά με τα πρόσφατα μέτρα τόνωσης της οικονομίας και την ταχεία ανάπτυξη της προσφοράς χρήματος αποδεικνύονται για άλλη μια φορά να είναι άκαιροι. Κατά την άποψη των συγγραφέων, πρέπει να βρούμε τη θέληση να αναζωογονήσουμε την κυβέρνηση και να διατηρήσουμε μια κεϋνσιανική στήριξη της οικονομίας ενώπιον μιας ιδεολογικής αντίθεσης και διαδεδομένης δυσπιστίας προς το ρόλο του κράτους.

Download Κείμενο (Brief) Δημόσιας Πολιτικής (Highlights) Νο. 114Α, 2010 PDF (1.10 MB)

Critics argue that the current crisis has exposed the profligacy of the Greek government and its citizens, who are stubbornly fighting proposed social spending cuts and refusing to live within their means. Yet Greece has one of the lowest per capita incomes in the European Union (EU), and its social safety net is modest compared to the rest of Europe. Since implementing its austerity program in January, it has reduced its budget deficit by 40 percent, largely through spending cuts. But slower growth is causing revenues to come in below targets, and fuel-tax increases have contributed to growing inflation. As the larger troubled economies like Spain and Italy also adopt austerity measures, the entire continent could find government revenues collapsing.

No rescue plan can address the central problem: that countries with very different economies are yoked to the same currency. Lacking a sovereign currency and unable to devalue their way out of trouble, they are left with few viable options—and voters in Germany and France will soon tire of paying the bill. A more far-reaching solution is needed.

Download Public Policy Brief Highlights No. 113A, 2010 PDF (423.97 KB)

The global abatement of the inflationary climate of the past three decades, combined with continuing financial instability, helped to promote the worldwide holding of US dollar reserves as a cushion against financial instability outside the United States, with the result that, for the United States itself, this was a period of remarkable price stability and reasonably stable economic expansion.

For the most part, the economics profession viewed these events as a story of central bank credibility, fiscal probity, and accelerating technological change coupled with changing demands on the labor market, creating a model of self-stabilizing free markets and hands-off policy makers motivated by doing the right thing—what Senior Scholar James K. Galbraith calls “the grand illusion of the Great Moderation.” A dissenting line of criticism focused on the stagnation of real wages, the growth of deficits in trade and the current account, and the search for new markets. This view implied that a crisis would occur, but that it would result from a rejection of US financial hegemony and a crash of the dollar, with the euro and the European Union (EU) the ostensible beneficiaries.

A third line of argument was articulated by two figures with substantially different perspectives on the Keynesian tradition: Wynne Godley and Hyman P. Minsky. Galbraith discusses the approaches of these Levy distinguished scholars, including Godley’s correlation of government surpluses and private debt accumulation and Minsky’s financial stability hypothesis, as well as their influence on the responses of the larger economic community.

Galbraith himself argues the fundamental illusion of viewing the US economy through the free-market prism of deregulation, privatization, and a benevolent government operating mainly through monetary stabilization. The real sources of American economic power, he says, lie with those who manage and control the public-private sectors—especially the public institutions in those sectors—and who often have a political agenda in hand. Galbraith calls this the predator state: a state that is not intent upon restructuring the rules in any idealistic way but upon using the existing institutions as a device for political patronage on a grand scale. And it is closely aligned with deregulation.

Download Public Policy Brief Highlight No. 112A, 2010 PDF (148.34 KB)

This brief by Yeva Nersisyan and Senior Scholar L. Randall Wray argues that deficits do not burden future generations with debt, nor do they crowd out private spending. The authors base their conclusions on the premise that a sovereign nation with its own currency cannot become insolvent, and that government financing is unlike that of a household or firm. Moreover, they observe that automatic stabilizers, not government bailouts and the stimulus package, have prevented the US economic contraction from devolving into another Great Depression. The authors dispense with unsubstantiated concerns about deficits and debts, noting that they mask the real issue: the unwillingness of deficit hawks to allow government to work for the good of the people.

Download Public Policy Brief Highlight No. 111A, 2010 PDF (407.61 KB)

A conference organized by the Levy Economics Institute of Bard College with support from the .

On April 14–16, more than 200 policymakers, economists, and analysts from government, industry, and academia gathered at the NYC headquarters of the Ford Foundation for the Levy Institute’s annual Minsky conference on the state of the US and world economies. This year’s conference drew upon many Minskyan themes, including reconstituting the financial structure; the reregulation and supervision of financial institutions; the relevance of the Glass-Steagall Act; the roles of the Federal Reserve, FDIC, and the Treasury; the moral hazard of the “too big to fail” doctrine; debt deflation; and the economics of the “big bank” and “big government.” Speakers compared the European and Latin American responses to the global financial crisis and proposals for reforming the international financial architecture. Moreover, central bank exit strategies, both national and international, were considered.

Download Conference Proceedings, April 14–16, 2010 PDF (1.45 MB)

The United States has the most expensive health care system in the world, yet its system produces inferior outcomes relative to those in other countries. This brief examines the health care reform debate and argues that the basic structure of the health care system is unlikely to change, because “reform” measures actually promote the status quo. The authors believe that the fundamental problem facing the US health care system is the unhealthy lifestyle of many Americans. They prefer to see a reduced role for private insurers and an increased role for government funding, along with greater public discussion of environmental and lifestyle factors. A Medicare buy-in (“public option”) for people under 65 would provide more cost control (by competing with private insurance), help to solve the problem of treatment denial based on preexisting conditions, expand the risk pool of patients, and enhance the global competitiveness of US corporations—thus bringing the US health care system closer to the “ideal” low-cost, universal (single-payer) insurance plan.

Download Public Policy Brief Highlight No. 110A, 2010 PDF (414.74 KB)

A conference organized by the Levy Economics Institute of Bard College with support from the Ford foundation

From his extensive research, Hyman Minsky was convinced that economic systems are prone to financial instability and crisis, and urged that lessons be learned from the crisis of 1929–1933 so that “it”—the Great Depression—could not happen again. This year’s conference drew upon many Minskyan themes, including reconstituting the financial structure; the reregulation and supervision of financial institutions; the relevance of the Glass-Steagall Act; the roles of the Federal Reserve, FDIC, and the Treasury; the moral hazard of the “too big to fail” doctrine; debt deflation; and the economics of the “big bank” and “big government.” Speakers compared the European and Latin American responses to the global financial crisis and proposals for reforming the international financial architecture. Moreover, central bank exit strategies, both national and international, were considered.

Pension funds have taken a big hit during the current financial crisis, with losses in the trillions of dollars. In addition, both private and public pensions are experiencing significant funding shortfalls, as is the government-run Pension Benefit Guaranty Corporation, which insures the defined-benefit pension plans of private American companies. Yeva Nersisyan and Senior Scholar L. Randall Wray argue that the employment-based pension system is highly problematic, since the strategy for managing pension funds leads to excessive cost and risk in an effort to achieve above-average returns. The average fund manager, however, will only achieve the risk-free return. The authors therefore advocate expanding Social Security and encouraging private and public pensions to invest only in safe (risk-free) Treasury bonds—which, on average, will beat the net returns on risky assets.

Download Public Policy Brief Highlight No. 109A, 2010 PDF (180.10 KB)

In his State of the Union address President Obama acknowledged that “our most urgent task is job creation”—that a move toward full employment will lay the foundation for long-term economic growth and ensure that the federal government creates the necessary conditions for businesses to expand and hire more workers. According to a new study by Levy scholars Rania Antonopoulos, Kijong Kim, Thomas Masterson, and Ajit Zacharias, the government needs to identify and invest in projects that have the potential for massive, and immediate, public job creation. They conclude that social sector investment, such as early childhood education and home-based care, would generate twice as many jobs as infrastructure spending and nearly 1.5 times the number created by investment in green energy, while catering to the most vulnerable segments of the workforce.

Download Public Policy Brief Highlight No. 108A, 2010 PDF (373.42 KB)

The purpose of the 1933 Banking Act—aka Glass-Steagall—was to prevent the exposure of commercial banks to the risks of investment banking and to ensure stability of the financial system. A proposed solution to the current financial crisis is to return to the basic tenets of this New Deal legislation.

Senior Scholar Jan Kregel provides an in-depth account of the Act, including the premises leading up to its adoption, its influence on the design of the financial system, and the subsequent collapse of the Act’s restrictions on securities trading (deregulation). He concludes that a return to the Act’s simple structure and strict segregation between (regulated) commercial and (unregulated) investment banking is unwarranted in light of ongoing questions about the commercial banks’ ability to compete with other financial institutions. Moreover, fundamental reform—the conflicting relationship between state and national charters and regulation—was bypassed by the Act.

Download Public Policy Brief Highlight No. 107A, 2010 PDF (162.34 KB)

The April Report highlights a brief by Institute scholars that finds that social sector investment generates more jobs than infrastructure spending or investing in green energy. The issue also includes a summary of our latest Strategic Analysis, which concerns the various policy actions required to emerge from the current recession.

NEW PUBLIC POLICY BRIEF

• Why President Obama Should Care about “Care”: An Effective and Equitable Investment Strategy for Job Creation

NEW STRATEGIC ANALYSIS

• Getting Out of the Recession?

NEW PUBLIC POLICY BRIEFS

• No Going Back: Why We Cannot Resolve Glass-Steagall’s Segregation of Banking and Finance
• The Trouble with Pensions: Toward an Alternative Public Policy to Support Retirement
• Toward True Health Care Reform: More Care, Less Insurance

NEW POLICY NOTE

• Observations on the Problem of “Too Big to Fail/Save/Resolve”

NEW WORKING PAPERS

• The Euro and Its Guardian of Stability: The Fiction and Reality of the 10th Anniversary Blast
• The Global Crisis and the Future of the Dollar: Toward Bretton Woods III?
• Is Reregulation of the Financial System an Oxymoron?
• Is This the Minsky Moment for Reform of Financial Regulation?
• The Global Financial Crisis and the Shift to Shadow Banking
• Decomposition of the Black-White Wage Differential in the Physician Market
• Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze—An Update to 2007

INSTITUTE NEWS

Upcoming Events

• The 19th Annual Hyman P. Minsky Conference on the State of the US and World Economies, April 14–16, 2010
• The Hyman P. Minsky Summer Seminar, June 19–29, 2010

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars
• Recent Levy Institute Publications

Download Volume 20, No. 2 PDF (598.84 KB)

This issue leads off with an updated Strategic Analysis that confirms the necessity of strong policy action to achieve full employment in the medium term, including a persistently high government deficit in the short term. This implies a growing public debt, which is sustainable as long as interest rates are kept at the current low level. The alternative is an ongoing unemployment rate above 10 percent that would represent a higher cost to future generations.

INSTITUTE RESEARCH

Program: The State of the US and World Economies

• Strategic Analysis
• GENNARO ZEZZA, Getting Out of the Recession?

Program: Monetary Policy and Financial Structure

• JAN KREGEL, No Going Back: Why We Cannot Restore Glass-Steagall’s Segregation of Banking and Finance
• JAN KREGEL, Observations on the Problem of “Too Big to Fail/Save/Resolve”
• JÖRG BIBOW, The Euro and Its Guardian of Stability: The Fiction and Reality of the 10th Anniversary Blast
• JÖRG BIBOW, The Global Crisis and the Future of the Dollar: Toward Bretton Woods III?
• JAN KREGEL, Is Reregulation of the Financial System an Oxymoron?
• JAN KREGEL, Is This the Minsky Moment for Reform of Financial Regulation?
• YEVA NERSISYAN and L. RANDALL WRAY, The Global Financial Crisis and the Shift to Shadow Banking

Program: The Distribution of Income and Wealth

• YEVA NERSISYAN and L. RANDALL WRAY, The Trouble with Pensions: Toward an Alternative Public Policy to Support Retirement
• MARSHALL AUERBACK and L. RANDALL WRAY, Toward True Health Care Reform: More Care, Less Insurance
• EDWARD N. WOLFF, Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze—An Update to 2007

Program: Employment Policy and Labor Markets

• RANIA ANTONOPOULOS, KIJONG KIM, THOMAS MASTERSON and AJIT ZACHARIAS, Why President Obama Should Care about “Care”: An Effective and Equitable Investment Strategy for Job Creation
• TSU-YU TSAO and ANDREW PEARLMAN, Decomposition of the Black-White Wage Differential in the Physician Market

INSTITUTE NEWS

Upcoming Events

• The 19th Annual Hyman P. Minsky Conference, April 14–16, 2010
• The Hyman P. Minsky Summer Seminar, June 19–29, 2010

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars
• Recent Levy Institute Publications

Download Volume 19, No. 2 PDF (456.35 KB)

After unprecedented efforts by the Federal Reserve and Congress, and the adoption of “big government” policies, the financial system is more stable but the official unemployment level is 10.2 percent—and rising. According to the Institute’s latest Strategic Analysis, the nascent recovery is still very fragile, so a good policymaking strategy will require a clear assessment of US economic prospects over the medium term (i.e., six years).

NEW STRATEGIC ANALYSIS

• The Current Recession And Beyond: Medium-term Prospects for the US Economy

NEW PUBLIC POLICY BRIEFS

• It Isn’t Working: Time for More Radical Policies
• Can Euroland Survive?

NEW POLICY NOTES

• Banks Running Wild: The Subversion of Insurance by “Life Settlements” and Credit Default Swaps
• Fiscal Stimulus, Job Creation, and the Economy: What Are the Lessons of the New Deal?

NEW LEVY INSTITUTE MEASURE OF ECONOMIC WELL-BEING (LIMEW)

• Has Progress Been Made in Alleviating Racial Economic Inequality?

NEW WORKING PAPERS

• The Unequal Burden of Poverty on Time Use Securitization, Deregulation, Economic Stability, and Financial Crisis, Parts I and II
• A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective, Parts I–IV
• Market Failure and Land Concentration
• A Financial Sector Balance Approach and the Cyclical Dynamics of the US Economy Explaining the Gender Wage Gap in Georgia
• Money Manager Capitalism and the Global Financial Crisis
• A Perspective on Minsky Moments: The Core of the Financial Instability
• Hypothesis in Light of the Subprime Crisis
• An Alternative View of Finance, Saving, Deficits, and Liquidity Lessons from the New Deal: Did the New Deal Prolong or Worsen the Great Depression?
• Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis

INSTITUTE NEWS

Upcoming Events

• The 19th Annual Hyman P. Minsky Conference on the State of the US and World Economies, April 14–16, 2010
• The Hyman P. Minsky Summer Seminar, June 19–29, 2010

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars

Download Volume 20, No. 1 PDF (604.35 KB)

In a new Strategic Analysis, the Institute’s Macro-Modeling Team determines that real GDP growth will remain well below the rate required to push unemployment back to a more acceptable level, but that a modest dollar devaluation could be very effective in promoting employment while addressing the threat posed by large imbalances. A related public policy brief, policy note, and working paper show that the success of New Deal programs strengthens the case for fiscal policies and a permanent employer-of-last-resort program as proposed by Hyman Minsky.

INSTITUTE RESEARCH

Program: The State of the US and World Economies

• Strategic Analysis
  DIMITRI B. PAPADIMITRIOU, GREG HANNSGEN, and GENNARO ZEZZA, The Current Recession and Beyond: Medium-term Prospects for the US Economy
• DIMITRI B. PAPADIMITRIOU and GREG HANNSGEN, The New New Deal Fracas: Did Roosevelt’s “Anticompetitive” Legislation Slow the Recovery from the Great Depression?
• GREG HANNSGEN and DIMITRI B. PAPADIMITRIOU, Fiscal Stimulus, Job Creation, and the Economy: What Are the Lessons of the New Deal?
• GREG HANNSGEN and DIMITRI B. PAPADIMITRIOU, Lessons from the New Deal: Did the New Deal Prolong or Worsen the Great Depression?

Program: Monetary Policy and Financial Structure

• JAN KREGEL, The Global Crisis and the Implications for Developing Countries and the BRICs: Is the B Really Justified?
• JAMES K. GALBRAITH, Financial and Monetary Issues as the Crisis Unfolds
• ÉRIC TYMOIGNE and L. RANDALL WRAY, It Isn’t Working: Time for More Radical Policies
• STEPHANIE A. KELTON and L. RANDALL WRAY, Can Euroland Survive?
• MARSHALL AUERBACK and L. RANDALL WRAY, Banks Running Wild: The Subversion of Insurance by “Life Settlements” and Credit Default Swaps
• ÉRIC TYMOIGNE, Securitization, Deregulation, Economic Stability, and Financial Crisis
• ÉRIC TYMOIGNE, A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective
• PAOLO CASADIO and ANTONIO PARADISO, A Financial Sector Balance Approach and the Cyclical Dynamics of the US Economy
• L. RANDALL WRAY, Money Manager Capitalism and the Global Financial Crisis
• ALESSANDRO VERCELLI, A Perspective on Minsky Moments: The Core of the Financial Instability Hypothesis in Light of the Subprime Crisis
• L. RANDALL WRAY, An Alternative View of Finance, Saving, Deficits, and Liquidity
• ALESSANDRO VERCELLI, Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis

Program: The Distribution of Income and Wealth

Levy Institute Measure of Economic Well-Being

• THOMAS MASTERSON, AJIT ZACHARIAS, and EDWARD N. WOLFF, Has Progress Been Made in Alleviating Racial Economic Inequality?
• HUGO BENÍTEZ-SILVA, SELCUK EREN, FRANK HEILAND, and SERGI JIMÉNEZ-MARTÍN, How Well Do Individuals Predict the Selling Prices of Their Homes?

Program: Gender Equality and the Economy

• BURCA KIZILIRMAK and EMEL MEMIS, The Unequal Burden of Poverty on Time Use
• TAMAR KHITARISHVILI, Explaining the Gender Wage Gap in Georgia

Program: Economic Policy for the 21st Century

• FATMA GÜL ÜNAL, Market Failure and Land Concentration

INSTITUTE NEWS

Upcoming Events

• The 19th Annual Hyman P. Minsky Conference, April 14–16, 2010
• The Hyman P. Minsky Summer Seminar, June 19–29, 2010

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars

Download Volume 19, No. 1 PDF (1.14 MB)

Social unrest across Europe is growing as Euroland’s economy collapses faster than the United States’, the result of falling exports and a weaker fiscal response. The controversial title of this brief is based on a belief that the nature of the euro itself limits Euroland’s fiscal policy space. The nations that have adopted the euro face “market-imposed” fiscal constraints on borrowing because they are not sovereign countries. Research Associate Stephanie A. Kelton and Senior Scholar L. Randall Wray foresee a real danger that these nations will be unable to prevent an accelerating slide toward depression that will threaten the existence of the European Union.

Download Public Policy Brief Highlights No. 106A, 2009 PDF (184.71 KB)

The Obama administration estimates that the 2009 American Recovery and Reinvestment Act (ARRA) will create or save approximately three and a half million jobs by the end of 2010. A Special Report featured in this issue points toward the necessity for a comprehensive employment strategy that goes well beyond ARRA–and concludes that the government could have achieved far more at the same cost.

CONFERENCE

• Employment Guarantee Policies: Responding to the Current Economic Crisis and Contributing to Long-Term Development

SPECIAL REPORT

• Who Gains from President Obama’s Stimulus Package … And How Much?

NEW PUBLIC POLICY BRIEFS

• Promoting Gender Equality through Stimulus Packages and Public Job Creation: Lessons Learned from South Africa’s Expanded Public Works Programme
• The Global Crisis and the Implications for Developing Countries and the BRICs: Is the B Really Justified?
• Financial and Monetary Issues as the Crisis Unfolds
• The New New Deal Fracas: Did Roosevelt’s “Anticompetitive” Legislation Slow the Recovery from the Great Depression?

NEW POLICY NOTE

• Some Simple Observations on the Reform of the International Monetary System

NEW WORKING PAPERS

• Revisiting (and Connecting) Marglin-Bhaduri and Minsky: An SFC Look at Financialization and Profit-led Growth
• Distributional Impact of the American Recovery and Reinvestment Act: A Microsimulation Approach
• Fiscal Policy and the Economics of Financial Balances
• From Unpaid to Paid Care Work: The Macroeconomic Implications of HIV and AIDS on Women’s Time-tax Burdens
• How Well Do Individuals Predict the Selling Prices of Their Homes?

LEVY INSTITUTE NEWS

• Conference: Gender and the Global Economic Order
• New Program Director
• New Research Associates

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars
• Recent Levy Institute Publications

Download Volume 19, No. 4 PDF (324.47 KB)

<p>The Obama administration has implemented several policies to &ldquo;jump-start&rdquo; the American economy&mdash;efforts that have largely focused on preserving the financial interests of major banks. The authors of this new policy brief believe that maintaining the status quo is not the solution, since it overlooks the debt problems of households and nonfinancial businesses&mdash;and re-creating the financial conditions that led to disaster will simply set the stage for a recurrence of the Great Depression or a Japanese-style &ldquo;lost decade.&rdquo; They recommend a more radical policy agenda, such as federal spending programs that directly provide jobs and sustain employment, thereby helping to restore the creditworthiness of borrowers, the profitability of firms, and the fiscal position of state and federal budgets.</p>

Download Public Policy Brief Highlights No. 105A, 2009 PDF (775.51 KB)

The Fall Summary leads off with an overview of the Institute’s annual Minsky conference, which this year focused on the extraordinary challenges posed by the global financial crisis. Also in this issue: a new Strategic Analysis outlines how increased deficits and their impact on private sector balance sheets will help stabilize the domestic economy.

INSTITUTE RESEARCH

Program: The State of the US and World Economies

• 18TH ANNUAL HYMAN P. MINSKY CONFERENCE
  Meeting the Challenges of Financial Crisis

• Strategic Analysis
  DIMITRI B. PAPADIMITRIOU and GREG HANNSGEN, Recent Rise in Federal Government and Federal Reserve Liabilities: Antidote to a Speculative Hangover
• MARSHALL AUERBACK, The Return of the State: The New Investment Paradigm
• CLAUDIO H. DOS SANTOS and ANTONIO CARLOS MACEDO E SILVA, Revisiting (and Connecting) Marglin-Bhaduri and Minsky: An SFC Look at Financialization and Profit-led Growth
• GENNARO ZEZZA, Fiscal Policy and the Economics of Financial Balances

Program: Monetary Policy and Financial Structure

• JAMES K. GALBRAITH, A “People First” Strategy: Credit Cannot Flow When There Are No Creditworthy Borrowers or Profitable Projects
• JAN KREGEL, It’s That “Vision” Thing: Why the Bailouts Aren’t Working, and Why a New Financial System Is Needed
• PHILIP ARESTIS and ELIAS KARAKITSOS, What Role for Central Banks in View of the Current Crisis?
• ELIAS KARAKITSOS, An Assessment of the Credit Crisis Solutions
• JAN TOPOROWSKI, “Enforced Indebtedness” and Capital Adequacy Requirements
• JAN KREGEL, Some Simple Observations on the Reform of the International Monetary System
• JAN KREGEL, Background Considerations to a Regulation of the US Financial System: Third Time a Charm? Or Strike Three?
• JAN KREGEL, Managing the Impact of Volatility in International Capital Markets in an Uncertain World

Program: The Distribution of Income and Wealth

• Special Report
  AJIT ZACHARIAS, THOMAS MASTERSON, and KIJONG KIM, Who Gains from President Obama’s Stimulus Package … And How Much?
• AJIT ZACHARIAS, THOMAS MASTERSON, and KIJONG KIM, Distributional Impact of the American Recovery and Reinvestment Act: A Microsimulation Approach

Levy Institute Measure of Economic Well-Being

• AJIT ZACHARIAS, EDWARD N. WOLFF, and THOMAS MASTERSON, New Estimates of Economic Inequality in America, 1959–2004
• AJIT ZACHARIAS, and VAMSI VAKULABHARANAM, Caste and Wealth Inequality in India

Program: Gender Equality and the Economy

• RANIA ANTONOPOULOS, Promoting Gender Equality through Stimulus Packages and Public Job Creation: Lessons Learned from South Africa’s Expanded Public Works Programme
• RANIA ANTONOPOULOS, The Current Economic and Financial Crisis: A Gender Perspective
• RANIA ANTONOPOULOS and TAUN TOAY, From Unpaid to Paid Care Work: The Macroeconomic Implications of HIV and AIDS on Women’s Time-tax Burdens

Program: Employment Policy and Labor Markets

• Conference: Employment Guarantee Policies: Responding to the Current Economic Crisis and Contributing to Long-Term Development
• MARTIN SHUBIK, A Crisis in Coordination and Competence
• MARTIN SHUBIK, A Proposal for a Federal Employment Reserve Authority
• SERGIO DESTAFANIS and GIUSEPPE MASTROMATTEO, Labor-market Performance in the OECD: An Assessment of Recent Evidence
• L. RANDALL WRAY, The Social and Economic Importance of Full Employment

Program: Immigration, Ethnicity, and Social Structure

• SANJAYA DESILVA and YUVAL ELMELECH, Housing Inequality in the United States: A Decomposition Analysis of Racial and Ethnic Disparities in Homeownership

Program: Economic Policy for the 21st Century

• MARTIN SHUBIK, The “Unintended Consequences” Game
• GIUSEPPE FONTANA, Whither New Consensus Macroeconomics? The Role of Government and Fiscal Policy in Modern Macroeconomics
• PHILIP ARESTIS, New Consensus Macroeconomics: A Critical Appraisal

INSTITUTE NEWS

• Conference: Gender and the Global Economic Crisis
• New Program Director
• New Research Associates

PUBLICATIONS AND PRESENTATIONS

• Publications and Presentations by Levy Institute Scholars
• Recent Levy Institute Publications

Download Volume 18, No. 3 PDF (400.05 KB)

A wave of revisionist work claims that “anticompetitive” New Deal legislation such as the National Industrial Recovery Act (NIRA) and the National Labor Relations Act (NLRA) greatly slowed the recovery from the Depression; in this new public policy brief, President Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen review these claims in light of current policy debates and cast into doubt the argument that NIRA and NLRA significantly prolonged or worsened the Depression. Moreover, Social Security, federal deposit insurance, and other New Deal programs helped usher in an era of relative prosperity following World War II. When it comes to combating the current recession and employment slump, it is the successful experience with relief and public works, and not the repercussions of pro-union and regulatory legislation, that offer the most relevant and helpful lessons.

Download Public Policy Brief Highlights No. 104A, 2009 PDF (124.51 KB)

A group of experts associated with Economists for Peace and Security and the Initiative for Rethinking the Economy met recently in Paris to discuss financial and monetary issues; their viewpoints, summarized here by Senior Scholar James K. Galbraith, are largely at odds with the global political and economic establishment.

Despite noting some success in averting a catastrophic collapse of liquidity and a decline in output, the Paris group was pessimistic that there would be sustained economic recovery and a return of high employment. There was general consensus that the precrisis financial system should not be restored, that reviving the financial sector first was not the way to revive the economy, and that governments should not pursue exit strategies that permit a return to the status quo. Rather, the crisis exposes the need for profound reform to meet a range of physical and social objectives.

Download Public Policy Brief Highlights No. 103A, 2009 PDF (128.24 KB)

The term BRIC was first coined by Goldman Sachs and refers to the fast-growing developing economies of Brazil, Russia, India, and China–a class of middle-income emerging market economies of relatively large size that are capable of self-sustained expansion. Their combined economies could exceed the combined economies of today’s richest countries by 2050. However, there are concerns about how the current financial crisis will affect the BRICs, and Goldman has questioned whether Brazil should remain within this group.

Senior Scholar Jan Kregel reviews the implications of the global crisis for developing countries, based on the factors driving global trade. He concludes that there is unlikely to be a return to the extremely positive conditions underlying the recent sharp increase in growth and external accounts. The key for developing countries is to transform from export-led to domestic demand-led growth, says Kregel. From this viewpoint, Brazil seems much better placed than the other BRIC countries.

Download Public Policy Brief Highlights No. 102A, 2009 PDF (644.30 KB)

Beyond loss of income, joblessness is associated with greater poverty, marginalization, and social exclusion; the current global crisis is clearly not helping. In this new Public Policy Brief, Research Scholar Rania Antonopoulos explores the impact of both joblessness and employment expansion on poverty, paying particular attention to the gender aspects of poverty and poverty-reducing public employment schemes targeting poor women.

The author presents the results of a Levy Institute study that examines the macroeconomic consequences of scaling up South Africa’s Expanded Public Works Programme by adding to it a new sector for social service delivery in health and education. She notes that gaps in such services for households that cannot afford to pay for them are mostly filled by long hours of invisible, unpaid work performed by women and children. Her proposed employment creation program addresses several policy objectives: income and job generation, provisioning of communities’ unmet needs, skill enhancement for a new cadre of workers, and promotion of gender equality by addressing the overtaxed time of women.

 

Download Public Policy Brief Highlights No. 101A, 2009 PDF (73.04 KB)