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Working Paper No. 992
August 31, 2021
Modeling Monopoly Money
AbstractMany of the claims put forth by Modern Monetary Theory (MMT) center around the state’s monopoly over its own currency. In this paper I interrogate the plausibility of two claims: 1) MMT’s theory of the price level—that the price level is a function of prices paid by government when it spends—and 2) the claim that […]
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Working Paper No. 991
July 12, 2021
Multifactor Keynesian Models of the Long-Term Interest Rate
AbstractThis paper presents multifactor Keynesian models of the long-term interest rate. In recent years there have been a proliferation of empirical studies based on the Keynesian approach to interest rate modeling. However, standard multifactor models of the long-term interest rate in quantitative finance have not been yet incorporated Keynes’s insights about interest rate dynamics. Keynes’s […]
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Research Project Report
July 08, 2021
Scope and Effects of Reducing Time Deficits via Intrahousehold Redistribution of Household Production
AbstractGender disparity in the division of responsibilities for unpaid care and domestic work (household production) is a central and pervasive component of inequalities between men and women and boys and girls. Reducing disparity in household production figures as one element of the goal of gender equality enshrined in the United Nations’ Sustainable Development Goals (SDGs) […]
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Working Paper No. 990
July 02, 2021
Ecological Fiscal Transfers and State-level Budgetary Spending in India
AbstractUsing panel data models, we analyze the flypaper effects—whether intergovernmental fiscal transfers or states’ own income determine expenditure commitments—on ecological fiscal spending in India. The econometric results show that the unconditional fiscal transfers, rather than the states’ own income, determine ecological expenditure in the forestry sector at subnational levels in India. The results hold when […]
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Public Policy Brief No. 155
June 30, 2021
Can Biden Build Back Better?
AbstractPresident Biden’s proposals for investing in social and physical infrastructure signal a return to a budget-neutral policymaking framework that has largely been set aside since the outbreak of the COVID-19 crisis. According Yeva Nersisyan and L. Randall Wray, this focus on ensuring revenues keep pace with spending increases can undermine the goals internal to both […]
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Strategic Analysis
June 17, 2021
The Pandemic, the Stimulus, and the Future Prospects for the US Economy
AbstractIn this report, Institute President Dimitri B. Papadimitriou and Research Scholars Michalis Nikiforos and Gennaro Zezza analyze how the US economy was affected by the pandemic and its prospects for recovery. Their baseline simulation using the Institute’s stock-flow macroeconometric model shows a significant pickup in the growth rate in 2021 as a result of the American […]
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Working Paper No. 989
June 17, 2021
The Endogeneity-to-Demand of the National Emergency Utilization Rate
AbstractThe paper provides an empirical discussion of the national emergency utilization rate (NEUR), which is based on a “national emergency” definition of potential output and is published by the US Census Bureau. Over the peak-to-peak period 1989–2019, the NEUR decreased by 14.2 percent. The paper examines the trajectory of potential determinants of capacity utilization over […]
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Policy Notes No. 3
June 08, 2021
Why President Biden Should Eliminate Corporate Taxes to Build Back Better
AbstractEdward Lane and L. Randall Wray explain how federal taxes on corporate profits are not well suited to either containing inflationary pressures or reducing inequality. They are not only a poor complement to President Biden’s proposed infrastructure plans, but are inefficient and ineffective taxes more broadly, according to Lane and Wray. The authors follow Hyman […]
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One-Pager No. 67
June 07, 2021
Should Corporate Tax Hikes Be Included in Biden’s “Build Back Better” Plans?
AbstractPresident Biden has proposed pairing his American Jobs Plan with an increase in federal corporate income taxes. Leaving aside the issue of whether any tax increases are needed to “pay for” the plan, Edward Lane and L. Randall Wray assess the proposed corporate profits tax hike in terms of its ability to meet two objectives: […]
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Working Paper No. 988
June 04, 2021
A Keynesian Approach to Modeling the Long-Term Interest Rate
AbstractThere are several widely used benchmark models of the long-term interest rate in quantitative finance. However, these models have yet to incorporate Keynes’s valuable insights about interest rate dynamics. The Keynesian approach to interest rate dynamics can be readily incorporated in the benchmark models of the long-term interest rate. This paper modifies several benchmark interest […]
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Policy Notes No. 2
May 13, 2021
Gender and Race in the Spotlight during the COVID-19 Pandemic
AbstractResearch Scholar Luiza Nassif-Pires, Luísa Cardoso, and Ana Luíza Matos de Oliveira analyze the importance of the “emergency benefit” (Auxílio Emergencial) in containing the increase in poverty and extreme poverty in Brazil during the COVID-19 pandemic. They find the emergency benefit mitigated the loss of income, brought the poverty rate to historically low levels, and […]
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One-Pager No. 66
April 01, 2021
Anatomy of a Stock Market Bubble
AbstractAccording to Frank Veneroso, a broad subset of today’s US stock market has become what he calls a “pure price-chasing bubble.” Examination of the history of comparable pure price-chasing bubbles shows there has been a set of key causal factors that contributed to these rare market events. The most extreme such case was an over-the-counter […]
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Working Paper No. 987
March 22, 2021
The Souk Al-Manakh
AbstractIt is widely agreed that the Nasdaq during the dot-com era 20 years ago was a full-fledged stock market bubble. Recently, the US stock market according to many metrics has become significantly more speculative and overvalued than it was at the dot-com peak 20 years ago. In both instances, a very broad subset of stocks […]
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Working Paper No. 986
March 10, 2021
Keynes’s Theories of the Business Cycle
AbstractThis paper traces the evolution of John Maynard Keynes’s theory of the business cycle from his early writings in 1913 to his policy prescriptions for the control of fluctuations in the early 1940s. The paper identifies six different “theories” of business fluctuations. With different theoretical frameworks in a 30-year span, the driver of fluctuations—namely cyclical […]
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One-Pager No. 65
February 17, 2021
COVID Relief and the Inflation Warriors
AbstractWith the unveiling of President Biden’s nearly $2 trillion proposal for addressing the COVID-19 crisis, Democrats appear keen to avoid repeating the mistakes of the Great Recession—most notably the inadequate fiscal response. Yeva Nersisyan and L. Randall Wray observe that while Democrats are not falling for the “deficit bogeyman” this time, critics have pushed the […]
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Working Paper No. 985
February 08, 2021
Has Japan Been Following Modern Money Theory Without Recognizing It?
AbstractModern Money Theory (MMT) economists have used Japan as an example of a country that demonstrates that high deficits and debt do not lead to insolvency, high interest rates, or inflation. MMT insists that governments that issue their own sovereign currency cannot be forced into insolvency, that they can make all payments as they come […]
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Working Paper No. 984
February 05, 2021
The Empirics of Long-Term Mexican Government Bond Yields
AbstractThis paper presents empirical models of Mexican government bond (MGB) yields based on monthly macroeconomic data. The current short-term interest rate has a decisive influence on MGB yields, after controlling for inflation and growth in industrial production. John Maynard Keynes claimed that government bond yields move in lockstep with the short-term interest rate. The models […]
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Working Paper No. 983
February 05, 2021
Intrahousehold Allocation of Household Production
AbstractIn this working paper, we analyze factors that may explain gender differences in the allocation of time to household production in sub-Saharan Africa. The study uses time use survey data to analyze the determinants of time spent on household production by husbands and wives in nuclear families in Ethiopia, Ghana, Tanzania, and South Africa. We […]
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Public Policy Brief No. 154
February 01, 2021
Another Bretton Woods Reform Moment
AbstractThis policy brief explores a route to remaking the international financial system that would avoid the contradictions inherent in some of the prevailing reform proposals currently under discussion. Senior Scholar Jan Kregel argues that the willingness of central banks to consider electronic currency provides an opening to reconsider a truly innovative reform of the international […]
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Working Paper No. 982
January 24, 2021
The Economic Problem: From Barter to Commodity Money to Electronic Money
AbstractThe success of alternative payment systems has led to discussion of various proposals to replace money with a new technology-based system, though many lack a clear idea of what exactly is the “money” they seek to replace. We begin by presenting the explanation of money’s role in the economy embraced by most mainstream economists and […]
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Policy Notes No. 1
January 19, 2021
Keynes’s Clearing Union Is Alive and Well and Living in Your Mobile Phone
AbstractWhile governments may consider implementation of John Maynard Keynes’s original clearing union proposal for the international financial architecture too difficult or radical, Senior Scholar Jan Kregel notes that the private sector has already produced a virtual equivalent of an international global monetary system. Currently, this system is employed as an extension of the international mobile […]
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Working Paper No. 981
January 19, 2021
What Jobs Should a Public Job Guarantee Provide?
AbstractThe job guarantee is a viable policy option for tackling both unemployment and underemployment. Hyman P. Minsky was one of the seminal writers on this subject. The first part of this working paper provides a survey of Minsky’s writings to identify what kind of jobs he had in mind when recommending employer-of-last-resort policies. Minsky favored: […]
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Working Paper No. 980
December 01, 2020
Balance Sheet Effects of a Currency Devaluation
AbstractThis working paper empirically and theoretically analyzes the exchange rate’s role in Mexico’s development for the period 2004–19. We test the hypothesis of the re(emergence) of the balance sheet effect due to an increase in external debt in the nonfinancial corporate sector; higher foreign debt would affect private investment after episodes of real currency depreciation, […]
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Working Paper No. 979
November 20, 2020
Is It Time to Eliminate Federal Corporate Income Taxes?
AbstractAs the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation’s infrastructure, and many other worthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In this working paper, Edward Lane and […]
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