The theory of comparative advantage says that there are gains from trade for the global economy as a whole. In this second brief of a three-part study of the international economy, Research Associate Thomas Palley observes that comparative advantage is driven by technology, which can be influenced by human action and policy. These associations have huge implications for the distribution of gains from trade and raise concerns about the future impact of international trade on the US economy. Palley calls for strategically designed US trade policy that can influence the nature of the global equilibrium and change the distribution of gains from trade. Recent works by Ralph Gomory and William Baumol and Paul Samuelson use pure trade theory to question the distribution of trade gains across countries over time and to challenge commonly held beliefs. These microeconomic and trade theorists identify a new issue: the dynamic evolution of comparative advantage and its impact on the distribution of gains from trade, which depends on changing global demand and supply conditions. (See also, Public Policy Brief No. 85.)

Download Public Policy Brief Highlights No. 86A, 2006 PDF (353.41 KB)

In a new Strategic Analysis summarized in this issue, President Dimitri B. Papadimitriou and Research Scholars Edward Chilcote and Gennaro Zezza observe that the economy continues to grow on an unbalanced path, and that there is an increase in the default risk for the private and financial sectors.

 

Contents:

 

INSTITUTE RESEARCH

Program: The State of the US and World Economies, and Strategic Analysis

• DIMITRI B. PAPADIMITRIOU, EDWARD CHILCOTE, and GENNARO ZEZZA, Can the Growth in the US Current Account Deficit Be Sustained? The Growing Burden of Servicing Foreign-Owned US Debt
• WYNNE GODLEY and GENNARO ZEZZA, Debt and Lending: A Cri de Coeur

Program: Distribution of Income and Wealth, and the LIMEW

• CONFERENCE: Government Spending on the Elderly
• EDWARD N. WOLFF and AJIT ZACHARIAS, Household Wealth and the Measurement of Economic Well-Being in the United States
• JAMES MAHMUD RICE, ROBERT E. GOODIN, and ANTTI PARPO, The Temporal Welfare State: A Cross-national Comparison
• J. BONKE, M. DEDING, and M. LAUSTEN, Time and Money: Substitutes in Real Terms and Complements in Satisfactions
• HARLEY FRAZIS and JAY STEWART, How Does Household Production Affect Earnings Inequality? Evidence from the American Time Use Survey

Program: Gender Equality and the Economy

• SYMPOSIUM: Gender Equality, Tax Policies, and Tax Reform in Comparative Perspective
• STEPHANIE SEGUINO and CAREN A. GROWN, Feminist-Kaleckian Macroeconomic Policy for Developing Countries

Program: Economic Policy for the 21st Century

Financial Markets and Monetary Policy

• L. RANDALL WRAY, Can Basel II Enhance Financial Stability? A Pessimistic View
• THOMAS I. PALLEY, The Fallacy of the Revised Bretton Woods Hypothesis: Why Today’s International Financial System Is Unsustainable
• ERIC TYMOIGNE, Asset Prices, Financial Fragility, and Central Banking
• CLAUDIO SARDONI, Why Central Banks (and Money) "Rule the Roost"

Federal Budget Policy

• L. RANDALL WRAY, Extending Minsky’s Classifications of Fragility to Government and the Open Economy
• L. RANDALL WRAY, Twin Deficits and Sustainability
• L. RANDALL WRAY, The Burden of Aging: Much Ado About Nothing, or Little to Do About Something?

Explorations in Theory and Empirical Analysis

• THOMAS R. MICHL, Tinbergen Rules the Taylor Rule
• GREG HANNSGEN, A Random Walk Down Maple Lane? A Critique of Neoclassical Consumption Theory with Reference to Housing Wealth
• GREG HANNSGEN, Gibson’s Paradox II
• ERIC TYMOIGNE, The Minskyan System, Part I: Properties of the Minskyan Analysis and How to Theorize and Model a Monetary Production Economy
• ERIC TYMOIGNE, The Minskyan System, Part II: Dynamics of the Minskyan Analysis and the Financial Fragility Hypothesis
• ERIC TYMOIGNE, The Minskyan System, Part III: System Dynamics Modeling of a Stock Flow-Consistent Minskyan Model

INSTITUTE NEWS

• New Research Associates
• New Levy Institute Book
• Upcoming Event: Upcoming Event, Conference, Employment Guarantee Policies: Theory and Practice, October 13-14

PUBLICATIONS AND PRESENTATIONS

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

Download Volume 15, No. 3 PDF (714.97 KB)

View Conference Website

Bureau for Development Policy, UNDP
in partnership with
The Levy Economics Institute of Bard College

The conference on Unpaid Work and the Economy: Gender, Poverty, and the Millennium Development Goals was organized by the Bureau for Development Policy, United Nations Development Programme, in partnership with The Levy Economics Institute. The purpose of convening this conference was to share views, research, and methodologies from around the world, on women’s unpaid work and its relationship to the economy within the context of pro-poor development policies, an issue that is critical in achieving the Millennium Development Goals (MDGs). Women’s unpaid work consists of time spent on unpaid care for members of their families and communities. It also consists of time spent to make up for deficiencies in public infrastructure, including in the energy, health, and sanitation sectors. Such activities range from providing long term care to the chronically ill to fetching water and firewood.

During the last decade, an increasing number of countries have collected time-use data, and some have developed satellite accounts in order to measure the economic contributions of unpaid work. These efforts notwithstanding, unpaid work, which is disproportionately carried out by women and children, has not been sufficiently integrated in the formulation of public investment policies and pro-poor alternative macroeconomic strategies. In most developing countries, efforts to reduce poverty and reach the MDGs provide a timely opportunity to draw attention to the linkages between unpaid work and economic and social development. During the conference, several presenters focused on unpaid work and its connection to employment generation policies, inequality and poverty, deterioration of economic well being, and trade impact assessment. Other researchers presented up to date assessments of the state of the art in the areas of conducting time-use surveys, constructing satellite accounts, and developing economic models that include unpaid work.

The conference was held on October 1–3, 2005, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, New York.

Can the growth in the current account deficit be sustained? A new Strategic Analysis by President Dimitri B. Papadimitriou and Research Scholars Edward Chilcote and Gennaro Zezza focuses on net income as an important component of the deficit, particularly the interest paid by the United States on American debt held abroad.

Contents:

NEW STRATEGIC ANALYSIS

• Can the Growth in the USCurrent Account Deficit Be Sustained? The Growing Burden of Servicing Foreign-Owned USDebt

CONFERENCE

• Government Spending on the Elderly

NEW POLICY NOTES

• Twin Deficits and Sustainability
• Debt and Lending: A Cri de Coeur

NEW PUBLIC POLICY BRIEF

• Can Basel II Enhance Financial Stability? A Pessimistic View

NEW WORKING PAPERS

• Tinbergen Rules the Taylor Rule
• A Random Walk Down Maple Lane? A Critique of Neoclassical Consumption Theory with Reference to Housing Wealth
• Feminist-Kaleckian Macroeconomic Policy for Developing Countries
• Household Wealth and the Measurement of Economic Well-Being in the United States
• Gibson’s Paradox II
• The Temporal Welfare State: A Cross-national Comparison

LEVY INSTITUTE NEWS

• Symposium
• New Positions for Levy Institute Scholars
• New Research Associates
• Recent Levy Institute Publications

Download Volume 16, No. 3 PDF (440.75 KB)

The stability of the international financial system is in doubt. Analysis of the system has focused mainly on the sustainability of financing the American trade deficit and has failed to understand the microeconomics of transactions within the system. According to this brief by Thomas I. Palley, the international financial system is unsustainable for reasons of demand, not supply. He recommends a global system of managed exchange rates to replace the current system before it crashes, along with the US economy.

East Asian economies are pursuing export-led growth and running huge trade surpluses with the United States by actively pursuing policies aimed at maintaining undervalued exchange rates. Their governments continue to accumulate US financial assets in order to support and stabilize the international financial system.While East Asian policymakers are correct in their belief that they can improve economic outcomes through exchange rate intervention, the system is undermining the structure of income and aggregate demand and eroding US manufacturing capacity.

Download Public Policy Brief Highlights No. 85A, 2006 PDF (319.69 KB)

The latest Strategic Analysis by the Institute’s Macro-Modeling Team suggests that much of the recent growth in GDP can be attributed to house price appreciation and private sector borrowing. However, rising house prices have not improved the equity position of households.

 

INSTITUTE RESEARCH

Program: The State of the US and World Economies, and Strategic Analysis

• DIMITRI B. PAPADIMITRIOU, EDWARD CHILCOTE, and GENNARO ZEZZA, Are Housing Prices, Household Debt, and Growth Sustainable?
• WYNNE GODLEY and MARC LAVOIE, Prolegomena to Realistic Monetary Macroeconomics: A Theory of Intelligible Sequences

Program: Distribution of Income and Wealth, and the LIMEW

• STEPHANIE SEGUINO, All Types of Inequality Are Not Created Equal: Divergent Impacts of Inequality on Economic Growth
• DANIEL S. HAMERMESH, Time to Eat: Household Production under Increasing Income Inequality
• INDIRA HIRWAY, Enhancing Livelihood Security through the National Employment Guarantee Act: Toward Effective Implementation of the Act
• LYN CRAIG,Where Do They Find the Time? An Analysis of How Parents Shift and Squeeze Their Time around Work and Child Care
• CHARLENE M. KALENKOSKI, DAVID C. RIBAR, and LESLIE S. STRATTON, Parental Child Care in Single Parent, Cohabiting, and Married Couple Families: Time Diary Evidence from the United States and the United Kingdom
• DIMITRI B. PAPADIMITRIOU, Government Effects on the Distribution of Income: An Overview

Program: Gender Equality and the Economy

• EBRU KONGAR, Importing Equality or Exporting Jobs? Competition and Gender Wage and Employment Differentials in USManufacturing

Program: Economic Policy for the 21st Century

• Financial Markets and Monetary Policy
• GIUSEPPE FONTANA and ALFONSO PALACIO-VERA, Are Long-run Price Stability and Short-run Output Stabilization All That Monetary Policy Can Aim For?
• C. SARDONI and L. RANDALL WRAY, Monetary Policy Strategies of the European Central Bank and the Federal Reserve Bank of the United States
• EDWARD CHILCOTE, Credit Derivatives and Financial Fragility
  Federal Budget Policy
• JAMES K. GALBRAITH, The Fiscal Facts: Public and Private Debts and the Future of the American Economy
  The Labor Market
• BRUCE FALLICK, CHARLES A. FLEISCHMAN, and JAMES B. REBITZER, Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster
  Explorations in Theory and Empirical Analysis
• KORKUT A. ERT�RK, Speculation, Liquidity Preference, and Monetary Circulation
• L. RANDALL WRAY, Keynes’s Approach to Money: An Assessment after 70 Years
• KAYE K. W. LEE, Personality and Earnings

INSTITUTE NEWS

Upcoming Events

• Conference: Government Spending on the Elderly, April 28–29
• Symposium: Gender Equality, Tax Policies, and Tax Reform in Comparative Perspective, May 17–18
• Russell Sage Foundation Grant

PUBLICATIONS AND PRESENTATIONS

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

Download Volume 15, No. 2 PDF (412.88 KB)

Even as the United States enjoys an economic expansion, there is an undercurrent of concern among economic analysts who follow financial markets. Some feel that the expansion of the credit derivatives markets poses the threat of a crisis similar to the Long-Term Capital Management debacle of 1998. Credit derivatives allow banks to share risks with holders of the derivatives, which are often mutual funds and other nonbank financial institutions.The Basel II Accord, now being implemented in many countries, is hailed as a good form of protection against the risk of a series of bank failures of the type that might cause problems in the derivatives markets. Basel II represents a more sophisticated and complex version of the original Basel Accord of 1992, which set minimum capital ratios for various types of bank assets.

Download Public Policy Brief Highlights No. 84A, 2006 PDF (237.62 KB)

The aging of the American population will be a primary domestic public policy issue during the next decades. According to Census Bureau projections, the proportion of the elderly in the total population will increase from its 2002 level of under 13 percent to slightly more than 16 percent by 2020. Concomitantly, the proportion of working-age population (20-64) is projected to decline from its current level of about 59 percent to 57.2 percent in 2020. These demographic changes imply a significant growth in the number beneficiaries in major federal entitlement programs. Apart from this growth, existing program rules and rapidly escalating health care costs are expected to lead to fiscal pressures and pose challenges for economic growth.

The United States is not alone in facing these challenges; in fact, in most countries with advanced economies, the problem is far more severe. The challenges of coping with an aging population require action in the near term to forestall more difficult choices in the long term.

This conference provides an assessment of forces that currently drive and will continue to drive government spending on retirees. Papers examine how the retirement and health care of older citizens might be financed and measure the potential impact of different reform proposals.

The conference was held April 28–29, 2006, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

The latest Levy Institute Strategic Analysis depicts a household sector that is struggling under an unprecedented burden of debt and relying upon an unsustainable upward trend in real estate prices. The authors find that a reversal of this trend could severely dampen economic growth.

Contents:

NEW STRATEGIC ANALYSIS

• Are Housing Prices, Household Debt, and Growth Sustainable?

NEW POLICY NOTES

• Reforming Deposit Insurance: The Case to Replace FDIC Protection with Self-Insurance

NEW WORKING PAPERS

• Are Long-run Price Stability and Short-run Output Stabilization All that Monetary Policy Can Aim For?
• Monetary Policy Strategies of the European Central Bank and the Federal Reserve Bank of the US
• Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster
• All Types of Inequality are Not Created Equal: Divergent Impacts of Inequality on Economic Growth
• Time to Eat: Household Production under Increasing Income Inequality
• Speculation, Liquidity Preference, and Monetary Circulation
• Importing Equality or Exporting Jobs? Competition and Gender Wage and Employment Differentials in USManufacturing
• Enhancing Livelihood Security through the National Employment Guarantee Act: Toward Effective Implementation of the Act
• Keynes’s Approach to Money: An Assessment after 70 Years
• Where Do They Find the Time? An Analysis of How Parents Shift and Squeeze Their Time around Work and Child Care
• Parental Child Care in Single Parent, Cohabiting, and Married Couple Families: Time Diary Evidence from the United States and the United Kingdom
• Prolegomena to Realistic Monetary Macroeconomics: A Theory of Intelligible Sequences
• Government Effects on the Distribution of Income: An Overv
• Personality and Earnings

LEVY INSTITUTE NEWS

• Russell Sage Foundation Grant Supports Perlmann Book
• Upcoming Events
• Conference: Government Spending on the Elderly
• Symposium: Gender Equality, Tax Policies, and Tax Reform in Comparative Perspective

PUBLICATIONS AND PRESENTATIONS

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

Download Volume 16, No. 2 PDF (418.64 KB)

When a woman works for General Motors, she is paid for her work, and her
work is counted as part of GDP. But what of the work she might do in her own
home? In a recent conference coorganized by the Levy Institute, the United Nations Development Programme, and the Bureau of Development Policy, scholars and policymakers challenged the traditional distinction between paid and unpaid work performed by women and men.

Contents:

CONFERENCES

• Unpaid Work and the Economy: Gender, Poverty, and the Millennium Development Goals
• Time Use and Economic Well-Being

NEW WORKING PAPERS

• Europe’s Quest for Monetary Stability: Central Banking Gone Astray
• Bad for Euroland,Worse for Germany—The ECB’s Record

LEVY INSTITUTE NEWS

• New Research Scholar
• New Research Associates
• New Levy Institute Book
• Upcoming Events
• Publications and Presentations
• Recent Levy Institute Publications

Download Volume 16, No. 1 PDF (535.84 KB)

In most developing countries, efforts to reduce poverty and reach the Millennium Development Goals provide a timely opportunity to draw attention to the contribution of unpaid work to economic and social development. Summarized in this issue, an October 2005 conference organized by the Levy Institute in partnership with the United Nations Development Programme focused on women’s unpaid work in the context of achieving the MDGs, and the need for viable pro-poor policy alternatives.

 

Contents:

 

INSTITUTE RESEARCH

Program: The State of the US and World Economies, and Strategic Analysis

• WYNNE GODLEY, DIMITRI B. PAPADIMITRIOU, CLAUDIO H. DOS SANTOS, and GENNARO ZEZZA, The United States and Her Creditors: Can theSymbiosis Last?

Program: Distribution of Income and Wealth, and theLIMEW

• CONFERENCE: Time Use and Economic Well-Being

Program: Gender Equality and the Economy

• CONFERENCE: Unpaid Work and the Economy: Gender, Poverty, and the Millennium Development Goals

Program: Economic Policy for the 21st Century

Financial Markets and Monetary Policy

• JÖRG BIBOW, Bad for Euroland, Worse for Germany—The ECB’s Record

Federal Budget Policy

• L. RANDALL WRAY, The Ownership Society: Social Security is Only the Beginning . . .
• L. RANDALL WRAY, Social Security’s 70th Anniversary: Surviving 20 Years of Reform

INSTITUTE NEWS

• New Research Scholar
• New Research Associates
• New Levy Institute Book: Italians Then, Mexicans Now
• Upcoming Event: Conference, Government Spending on the Elderly, April 28–29

CALL FOR PAPERS

• Symposium: Gender, Tax Policies, and Tax Reform in Comparative Perspective, May 17–18

PUBLICATIONS AND PRESENTATIONS

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

Download Volume 15, No. 1 PDF (597.82 KB)

The Federal Deposit Insurance Corporation (FDIC) currently insures bank deposit balances up to $100,000. According to some observers, statutory protection creates moral hazard problems for insurers because it allows banks to engage in risky activities. As an example, moral hazard was a key contributor to huge losses suffered when thrift institutions failed during the 1980s.

Author Panos Konstas outlines a plan to reduce the risk of government losses by replacing insured deposits with uninsured deposits and eliminating some of the costs of deposit insurance. His plan proposes a self-insured (SI) depositor system that places an intermediary between the lender (saver) and borrower (bank) in the credit-flow chain. The FDIC would guarantee saver loans and allow the intermediary to borrow at the risk-free interest rate if the intermediary’s bank deposit is statutorily defined outside the realm of FDIC insurance. The risk is therefore transferred to depositors (intermediaries); thus creating incentives for depositors to earn a rate of return at least equal to the cost of borrowing plus a risk premium based on the risk profile of banks.

Download Public Policy Brief Highlights No. 83A, 2006 PDF (298.64 KB)

This conference was organized as part of the Levy Institute’s research and policy program of the distribution of income and wealth. Its purpose was to cover issues and topics related to time allocation. Presentations focus on utilizing time-use data in investigating the determinants of time allocation by gender and other demographic and economic characteristics (e.g., family type and employment status); valuing unpaid household work; developing measures of individual or household economic well-being that include unpaid household production; and analyzing the distribution of household production and augmented measures of household well-being. The papers also addressed problems of statistical methodology and data in dealing with these topics.

The conference was held October 28–29, 2005, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

A new Levy Institute Strategic Analysis examines the current states of the economy’s main balances and proposes an alternative to the piecemeal protectionist measures that some have advocated. The authors argue that some of the dire events in their baseline scenario—which shows that the balance of trade is likely to deteriorate by the end of the decade—could be avoided if direct action were taken to mitigate the current account deficit.

 

Contents:

New Strategic Analysis

• The United States and Her Creditors: Is the Symbiosis Viable?

New Levy Institute Measure of Economic Well-Being Report

• Interim Report 2005: The Effects of Government Deficits and the 2001–02 Recession on Well-Being

New Public Policy Briefs

• Breaking Out of the Deficit Trap: The Case Against the Fiscal Hawks
• The Ownership Society: Social Security Is Only the Beginning . . .

New Policy Notes

• Some Unpleasant American Arithmetic
• Social Security’s 70th Anniversary: Surviving 20 Years of Reform

New Working Papers

• Macroeconomics of Speculation
• Refocusing the ECB on Output Stabilization and Growth through Inflation Targeting?
• Gender Inequality in a Globalizing World
• Liquidity Preference Theory Revisited—To Ditch It or to Build on It?

Levy Institute News

• New Research Scholar
• New Research Associate
• Levy Institute Awarded Grant from Smith Richardson, Inc.
• Upcoming Event: Time Use and Economic Well-Being: A Conference of The Levy Economics Institute of Bard College

Publications and Presentations

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

Download Volume 15, No. 4 PDF (1.23 MB)

Organized by the Bureau for Development Policy, United Nations Development Programme, in partnership with The Levy Economics Institute of Bard College

View Conference Website

The purpose of convening this conference was to share views, research, and methodologies from around the world, on women’s unpaid work and its relationship to the economy within the context of pro-poor development policies, an issue that is critical in achieving the Millennium Development Goals (MDGs). Women’s unpaid work consists of time spent on unpaid care for members of their families and communities. It also consists of time spent to make up for deficiencies in public infrastructure, including in the energy, health, and sanitation sectors. Such activities range from providing long- term care to the chronically ill to fetching water and firewood.

During the last decade, an increasing number of countries have collected time-use data, and some have developed satellite accounts in order to measure the economic contributions of unpaid work. These efforts notwithstanding, unpaid work, which is disproportionately carried out by women and children, has not been sufficiently integrated in the formulation of public investment policies and pro poor alternative macroeconomic strategies. In most developing countries, efforts to reduce poverty and reach the MDGs provide a timely opportunity to draw attention to the linkages between unpaid work and economic and social development. Several presenters focused on unpaid work and its connection to employment generation policies, inequality and poverty, deterioration of economic wellbeing, and trade impact assessment. Others presented up-to-date assessments of the state of the art in the areas of conducting time-use surveys, constructing satellite accounts, and developing economic models that include unpaid work.

The conference was held October 1–3, 2005, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

Organized by the Bureau for Development Policy, United Nations Development Programme, in partnership with The Levy Economics Institute of Bard College

View Conference Website

The purpose of convening this conference was to share views, research, and methodologies from around the world on women’s unpaid work and its relationship to the economy within the context of pro-poor development policies. This issue is critical to achieving the Millennium Development Goals (MDGs) set forth at the United Nations summit in September 2000.

Women’s unpaid work consists of time spent on unpaid care for members of their families and communities. It also consists of time spent to make up for deficiencies in public infrastructure, including in the energy, health, and sanitation sectors. Such activities range from providing long-term care to the chronically ill to fetching water and firewood.

During the last decade, an increasing number of countries have collected time-use data, and some have developed satellite accounts in order to measure the economic contributions of unpaid work. These efforts notwithstanding, unpaid work, which is disproportionately carried out by women and children, has not been sufficiently integrated in the formulation of public investment policies and pro poor alternative macroeconomic strategies. In most developing countries, efforts to reduce poverty and reach the MDGs provide a timely opportunity to draw attention to the linkages between unpaid work and economic and social development. Several presenters focused on unpaid work and its connection to employment generation policies, inequality and poverty, deterioration of economic wellbeing, and trade impact assessment. Others presented up-to-date assessments of the state of the art in the areas of conducting time-use surveys, constructing satellite accounts, and developing economic models that include unpaid work.

The conference was held October 1–3, 2005, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

Download Conference Proceedings, October 1–3, 2005 PDF (1.30 MB)

In a new Policy Note, Distinguished Scholar Wynne Godley observes that the state of aggregate demand in the United States is precariously based, as private debt and borrowing cannot continue to provide the motor for expansion for more than a couple of years, particularly if interest rates continue to rise. The risk is a return to recession, Godley says, and there is no remedy this time in the shape of a fiscal expansion.

 

Contents:

 

INSTITUTE RESEARCH

Program: The State of the US and World Economies, and Strategic Analysis

• WYNNE GODLEY, Imbalances Looking for a Policy
• WYNNE GODLEY, Some Unpleasant American Arithmetic

Program: Distribution of Income and Wealth, and the LIMEW

• EDWARD N. WOLFF, AJIT ZACHARIAS, and HYUNSUB KUM, Interim Report 2005:The Effects of Government Deficits and the 2001–02 Recession on Well-Being
• EDWARD N. WOLFF, Is the Equalizing Effect of Retirement Wealth Wearing Off?

Program: Gender Equality and the Economy

• STEPHANIE SEGUINO, Gender Inequality in a Globalizing World

Program: Economic Policy for the 21st Century

• CONFERENCE: The 15th Annual Hyman P.Minsky Conference, “Economic Imbalance: Fiscal and Monetary Policy for Sustainable Growth”

Financial Markets and Monetary Policy

• KORKUT A. ERTÜRK, Is the Dollar at Risk?
• STEPHANIE SEGUINO, Is More Mobility Good?: Firm Mobility and the Low Wage–Low Productivity Trap
• KORKUT A. ERTÜRK, Macroeconomics of Speculation
• JÖRG BIBOW, Refocusing the ECB on Output Stabilization and Growth through Inflation Targeting?
• JÖRG BIBOW, Liquidity Preference Theory Revisited: To Ditch or to Build On It?
• JÖRG BIBOW, Europe’s Quest for Monetary Stability: Central Banking Gone Astray

Federal Budget Policy

• PANOS KONSTAS, FDIC-Sponsored Self-Insured Depositors: Using Insurance to Gain Market Discipline and Lower the Cost of Bank Funding

Explorations in Theory and Empirical Analysis

• CLAUDIO H. DOS SANTOS and GENNARO ZEZZA, A Simplified Stock-Flow Consistent Post-Keynesian Growth Model
• GREG HANNSGEN, The Disutility of International Debt: Analytical Results and Methodological Implications

INSTITUTE NEWS

• New Program Codirector and Senior Scholar
• New Research Scholar and New Research Associate
• United Nations Development Programme and Levy Institute Partnership
• Upcoming Event: Conference, “Time Use and Economic Well-Being,” October 28–29
• Levy Institute Awarded Grant from Smith Richardson Foundation, Inc.

PUBLICATIONS AND PRESENTATIONS

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

Download Volume 14, No. 3 PDF (362.38 KB)

As his new term begins, President George W. Bush has been trying to focus his domestic agenda on what he calls the “ownership society,” a sweeping vision of an America in which more citizens would hold significant assets and be free to make their own choices about providing for their health care and retirement, and educating their children.

L. Randall Wray, who has written for the Levy Institute on many topics, evaluates the premises and logic of this program. Wray points out that much of the history of the Western world since the advent of liberalism has been marked by a gradual rise in the power of those who lack property. Some of the milestones in this progression include universal suffrage, regulation of business, and progressive taxation. Bush’s ownership society proposals, according to Wray, would result in a partial reversal of the progress of the last 250 years. The reason is that, while Bush’s plans would undoubtedly increase the choices and power of those who have property, they would fail to democratize ownership. Many gains to the wealthy would come at the expense of the poor, the sick, and the elderly.

Download Public Policy Brief Highlights No. 82A, 2005 PDF (246.16 KB)

The July Report leads off with a summary of the Levy Institute’s Annual Hyman P. Minsky Conference, which this year examined the fiscal and monetary policies required for sustainable growth.

Contents:

Conference:

• 15th Annual Hyman P. Minsky Conference on the State of the US and World Economies;
• Economic Imbalance: Fiscal and Monetary Policy for Sustainable Growth.

New Policy Notes:

• Is the Dollar at Risk?;
• Imbalances Looking for a Policy.

New Levy Institute Measure of Economic Well-Being Report:

• Economic Well-Being in US Regions and the Red and Blue States.

New Working Papers:

• Asset Ownership along Gender Lines: Evidence from Thailand;
• FDIC-Sponsored Self-Insured Depositors: Using Insurance to Gain Market Discipline and Lower the Cost of Bank Funding;
• Is the Equalizing Effect of Retirement Wealth Wearing Off?;
• A Simplified Stock-Flow Consistent Post-Keynesian Growth Model;
• The Disutility of International Debt: Analytical Results and Methodological Implications;
• Is More Mobility Good? Firm Mobility and the Low Wage–Low Productivity Trap.

Levy Institute News:

• New Program Codirector and Senior Scholar;
• Upcoming Events:
  • Conferences,
  • Unpaid Work and the Economy: Gender, Poverty, and the Millennium Development Goals,
  • Time Use and Economic Well-Being;
• Recent Levy Institute Publications.

Download Volume 15, No. 3 PDF (304.29 KB)

For some time, Levy Institute scholars have been engaged with issues related to the current account, government, and private sector balances. We have argued that the existing imbalances in these accounts are unsustainable and will ultimately present a serious challenge to the performance of the American economy.

Other scholars are also concerned, but for reasons that we do not share. They argue that the interest rate is determined by the supply and demand of saving. When the government reduces its saving, the total supply of saving falls, and the interest rate inevitably rises. The result, they say, is that interest-sensitive spending, and investment in particular, falls. Finally, these scholars say, less investment now necessarily implies less output in the future.

In this new brief, Senior Scholar James K. Galbraith evaluates a recent article by William G. Gale and Peter R. Orszag, two economists who regard this view of deficits as plausible. He forwards an alternative, Keynesian view. This alternative suggests that deficits can increase overall output, possibly enabling the government to spend more money without increasing the ratio of the debt to GDP. He casts doubt on the notion that the interest rate is determined by the supply and demand of saving, arguing that monetary policy plays a much larger role than Gale and Orszag allow for. Moreover, he writes, strong demand for goods and services is more important than the supply of capital in determining the pace of technological advance and the rate of growth of output per worker.

Download Public Policy Brief Highlights No. 81A, 2005 PDF (241.56 KB)

This issue begins with a sensitivity analysis of public consumption—a major component of the Levy Institute Measure of Economic Well-Being—in relation to economic well-being in the United States. One of the notable observations contained in our report is that the distribution of public consumption is pro-rich.

 

Download Volume 14, No. 2 PDF (269.19 KB)

Participants at the 15th Annual Hyman P. Minsky Conference offered their viewpoints on the American economy’s recovery following a short-lived recession, policy guidelines to be considered
within the context of current economic trends, and the implications for both the national economy and international
economies. What are the monetary and fiscal policy prescriptions for growth, employment,
and price stability?
The presenters come from business, government, and the academy. They are uniquely qualified to
offer their insights on these issues.

The conference was held April 21–22, 2005, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

Download Conference Proceedings, April 21–22, 2005 PDF (1.39 MB)

This year’s Hyman P. Minsky Conference drew upon public discussions on the state of the United States and world economies in the context of current economic trends and their implications. Topics included fiscal and monetary policies for continued growth and employment; brutal gyrations in the currency markets and the consequent exchange-rate misalignments, as well as possible cures; and the US trade deficit, particularly its impact on employment and the conduct of monetary and fiscal policies. The international economic role of the United States was examined in view of the current international economic landscape.

The conference was held April 21–22, 2004, at the Levy Institute’s research and conference center at Blithewood on the campus of Bard College, Annandale-on-Hudson, N.Y.

A new Strategic Analysis by the Levy Institute’s Macro-Modeling Team assesses the main sector balances, all of which are now deficits. The private sector, led by personal borrowing, is now running a deficit approaching 2 percent of GDP; although this trend has helped support the economy in the short term, it is unsustainable, given the private sector’s existing pile of debt.

 

Contents:

New Strategic Analysis

• "How Fragile Is the US Economy?"

New Policy Notes

• "The Case for an Environmentally Sustainable Jobs Program,"
• "Manufacturing a Crisis: The Neocon Attack on Social Security"

New Publication

• "Levy Institute Measure of Economic Well-Being: How Much Does Public Consumption Matter for Well-Being?"

New Public Policy Briefs

• "The Fed and the New Monetary Consensus: The Case for Rate Hikes, Part Two"

New Working Papers

• "The Transmission Mechanism of Monetary Policy: A Critical Review,"
• "Visions and Scenarios: Heilbroner’s Worldly Philosophy, Lowe’s Political Economics, and the Methodology of Ecological Economics,"
• "Household Wealth Distribution in Italy in the 1990s,"
• "Measuring Capacity Utilization in OECD Countries: A Cointegration Method,"
• "Occupational and Industrial Mobility in the United States 1969–93,"
• "Determinants of Minority-White Differentials in Child Poverty"

Levy Institute News

• New Research Associate, New Book in Levy Institute Book Series

Upcoming Events

• Conferences: Economic Imbalance: Fiscal and Monetary Policy for Sustainable Growth; Time Use and Economic Well-Being

Publications and Presentations by Levy Institute Scholars

Recent Levy Institute Publications

Download Volume 15, No. 2 PDF (391.98 KB)