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Public Policy Brief No. 44
September 06, 1998
The Asian Disease: Plausible Diagnoses, Possible Remedies
AbstractAsia presents a cumulation of apparently rational decisions that produced disastrous results—a textbook illustration of “financial instability” developing from the economics of euphoria. A combination of factors produced the crisis as enormous capital inflows were drawn to the “Asian miracle“-pegged exchange rates with fluctuating interest rates, integrated economies, moral hazard created by central banks, and […]
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Public Policy Brief No. 43
September 05, 1998
How Big Should the Public Capital Stock Be?
AbstractInvestment in infrastructure is necessary for a strong, flexible, and growing economy. However, the relationship between public capital and economic growth is not linear. At a certain level, the tax burden associated with financing and maintaining public capital reduces the returns to private industry, which in turn reduces growth; also, different types of spending have […]
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Working Paper No. 252
September 01, 1998
Modern Money
AbstractAll modern economies have a “chartalist” or “state” money, as acknowledged by Friedrich Knapp and John Maynard Keynes. In this paper, I examine the “history” of money to shed light on its origins. I also examine in detail the views of those who accepted the chartalist, or state, approach to money, from Adam Smith to […]
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Working Paper No. 251
September 01, 1998
Paul Davidson’s Economics
AbstractPaul Davidson is one of the best known and most influential post-Keynesian economists. He has insisted throughout his career that economists should focus on real-world problems and that the purpose of economic policy is to help society become more humane and civilized. He is also known for his insistence on adhering to the words and […]
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Working Paper No. 250
September 01, 1998
Explaining Long-Term Exchange Rate Behavior in the United States and Japan
AbstractConventional exchange rate models are based on the fundamental hypothesis that, in the long run, real exchange rates will move in such a way as to make countries equally competitive. Thus they assume that, in the long run, trade between countries will be roughly balanced. The difficulty in assessing expectations about the consequences of trade […]
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Public Policy Brief No. 42
August 04, 1998
Automatic Adjustment of the Minimum Wage
AbstractThe fact that every change in the minimum wage requires an act of Congress means that debate over the wisdom of having a minimum is repeatedly returned to the political arena. As inflation continues to erode the value of the minimum wage, each legislative delay means that a larger increase is required. The larger the […]
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Working Paper No. 249
August 01, 1998
The American Wage Structure, 1920–1947
AbstractThis paper uses industrial wage data and a systematic if unconventional selection of methods to examine changes in the inter-industry structure of wages between 1920 and 1947. We first sort among the available data on wage change by industry and occupation for blocs that exhibit common patterns of wage changes over time, reducing the 83 […]
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Working Paper No. 248
August 01, 1998
Can Expenditure Cuts Eliminate a Budget Deficit?
AbstractAustralian governments since the late 1970s have attempted to eliminate the fiscal deficit through reductions in expenditure. These efforts have failed. With each successive business cycle the federal government’s budget outcome has been an ever-growing deficit. This paper explains the failure of the government to achieve its balanced budget objective through expenditure reductions. It argues […]
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Working Paper No. 247
August 01, 1998
“Inability to Be Self-Reliant” As an Indicator of US Poverty
AbstractThe official poverty measure is based on the premise that all families should have sufficient income from either their own efforts or government support to boost them above a family-size-specific threshold. Given the current policy emphasis on self-reliance and a smaller role for government, this measure appears to have less policy relevance now than in […]
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Working Paper No. 246
August 01, 1998
Derivatives and Global Capital Flows
AbstractFour factors in the current financial crisis in Asia have surprised observers. First, although capital flows in Asia appeared stable, the crisis was precipitated by the reversal of the very large proportion of short-term lending. Second, although Asia appeared to be an example of the maxim that capital flows to the region with the highest […]
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Public Policy Brief No. 41
July 03, 1998
Side Effects of Progress
AbstractWhy does a dynamic growing economy have a persistent long-term unemployment problem? Research Associates Baumol and Wolff have isolated one cause. Although technological change, the engine of growth and economic progress, may not affect or may even increase the total number of jobs available, the fact that it creates a demand for new skills and […]
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Working Paper No. 245
July 01, 1998
Reciprocity and the Guaranteed Income
AbstractThis paper argues that a guaranteed income is not only consistent with the principle of reciprocity but is required for reciprocity. This conclusion follows from a three-part argument. First, if a guaranteed income is in place, all individuals have the same opportunity to live without working. Therefore, those who choose not to work do not […]
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Policy Notes No. 7
July 01, 1998
Goldilocks and the Three Bears
AbstractUnlike the Papa, Mama, and Baby Bears faced by the storybook Goldilocks, our Goldilocks faced three ferocious grizzlies: a cascading, global financial crisis, global deflation and excess capacity (or insufficient demand), and a domestic fiscal surplus in conjunction with record private deficits.
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Working Paper No. 244
July 01, 1998
Can Taxes and Bonds Finance Government Spending?
AbstractThis paper investigates the commonly held belief that government spending is normally financed through a combination of taxes and bond sales. The argument is a technical one and requires a detailed analysis of reserve accounting at the central bank. After carefully considering the complexities of reserve accounting, it is argued that the proceeds from taxation […]
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Working Paper No. 243
July 01, 1998
State Type and Congressional Voting on the Minimum Wage
AbstractHow members of Congress vote on increases in the minimum wage is a function of several factors, most notably party affiliation and constituent interest. But also among those factors is the existence of “right-to-work” laws in the representative’s state and the presence of labor unions, especially as they represent a voting constituency. This paper examines […]
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Working Paper No. 242
July 01, 1998
Money and Credit in a Keynesian Model of Income Determination
AbstractThis paper formally integrates the theory of money and credit derived ultimately from Wicksell into the Keynesian theory of income determination, with assets allocated according to Tobinesque principles. The model deployed has much in common with the modern “endogenous money” school initiated by Kaldor which emphasizes the essential role played by credit in any real […]
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Working Paper No. 241
July 01, 1998
Optimal Financing by Money and Taxes of Productive and Unproductive Government Spending
AbstractThis paper contains an investigation of the effects of different means of financing government spending on economic growth, inflation, and welfare. In this setting, two different types of government spending are considered: productive expenditures that provide services to the private sector in its production activities, and unproductive expenditures that have no direct influence on the […]
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Working Paper No. 240
July 01, 1998
The Place of Cultural Explanations and Historical Specificity in Discussions of Modes of Incorporation and Segmented Assimilation
AbstractIn this new working paper, Senior Scholar Joel Perlmann discusses cultural, structural, and contextual explanations of segmented assimilation among the children of immigrants. In it he addresses a number of questions about modes of incorporation as an explanation for ethnic differences in behavior—what, for example, is the status of cultural explanations for ethnic behavior if […]
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Working Paper No. 239
July 01, 1998
An Ethical Framework for Cost-Effective Medicine
AbstractHMO medicine has been effective in controlling once-runaway health care costs. But it sets up inevitable conflict between patient care and the financial well-being of the health plan and of its employee or contract physicians. This paper looks at the ethical problems posed by managed care (in particular, at its incentives to physicians to economize […]
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Working Paper No. 238
June 01, 1998
The Macroeconomics of Industrial Strategy
AbstractThis paper explores some of the links between macroeconomic policy and industrial strategy. The perspective of the present paper is to emphasize the role of the output and investment activities of enterprises rather than the general focus on the labor market in the determination of economic performance. We have explored this aspect in some detail […]
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Policy Notes No. 6
June 01, 1998
What to Do with the Surplus
AbstractNeither Congress nor the president is on the right track. Rather than protecting the surplus, we should be increasing spending and cutting taxes to contain the looming world recession.
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Public Policy Brief No. 40
May 02, 1998
Overcoming America’s Infrastructure Deficit
AbstractCondemned bridges, dilapidated school buildings, contaminated water supplies, and other infrastructure shortcomings threaten American growth, productivity, and prosperity. The authors of this brief propose a plan for financing infrastructure projects that is designed to have minimal effect on the federal budget and to promote sound fiscal operation. Federal zero-interest mortgage loans to state and local […]
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Public Policy Brief No. 39
May 01, 1998
The Unmeasured Labor Force
AbstractIs the current labor market as tight as official statistics would seem to indicate? If incumbent workers increase their hours of work, it is irrelevant to the unemployment rate, but hardly irrelevant to the level of labor supply. The authors of this brief find that job insecurity and stagnating wages have made Americans willing to […]
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Working Paper No. 237
May 01, 1998
Speed of Technical Progress and Length of the Average Interjob Period
AbstractThe mean duration of unemployment approximately doubled in the United States between the early 1950s and the mid-1990s, with most of the increase occurring since the early 1970s. Using a simple model linking the average duration of unemployment with the speed of technical change, and aggregate time-series data, the authors find strong evidence that both […]
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