Publications

1657 publications found

• Working Paper No.160 01 May 1996

  Intervention versus Regulation

  E. V. K. FitzGerald
  Abstract

  This new working paper investigates the roles the International Monetary Fund (IMF) might play given its mandate to
  provide institutional support for a global capital market that can promote trade and investment, and given current
  worldwide economic instabilities such as highly volatile exchange rates.

  
  

  The experience of steady growth and price stability under the Bretton Woods system is often cited in support
  of a return to a managed fixed-rate system. Author E. V. K. FitzGerald contends, however, that although exchange rate
  instability might be related to the major financial crises of the past 20 years, such instability is not the source of
  financial crises; rather, factors such as the worldwide integration of financial markets and the development of
  heterogeneous financial instruments have created new sources of instability. In the new worldwide financial
  system exchange rates function as asset prices (that is, they reflect international capital flows) as well to
  regulate trade flows. Current account balances are, then, more likely a function of internal imbalances than of
  trade imbalances. Moreover, because interest rates reflect the desire to hold a given stock of bonds, their
  fluctuation does not cause international capital markets to clear (that is, cause saving to equal investment on a
  global scale).

  Download Working Paper No. 160 PDF (2.44 MB)
• Working Paper No.159 01 May 1996

  The Anatomy of the Bond Market Turbulence of 1994

  Claudio E. V. Borio and Robert N. McCauley
  Abstract

  The bond market sell-off of 1994 has begun to
  show up on lists of market events against which risk management systems are judged, but there has been little analysis of
  the cause of the 1994 decline. This new working paper fills the void by examining a number of factors that
  might explain the rise in volatility during that year. The authors investigate four types of one of these factors,
  market dynamics—volatility persistence, relationships in the direction of market movements, foreign
  disinvestment, and volatility spillover effects from other markets—and find that persistence has strong explanatory power.

  Download Working Paper No. 159 PDF (1.94 MB)
• Book Series 01 May 1996

  Money in Motion

  Ghislain Deleplace and Edward J. Nell
  Abstract

  In its analysis of money, contemporary economics has focused on money’s function as a store of value, neglecting its role as a medium of circulation. When circulation is put center stage, it becomes apparent that the supply of money does indeed adapt to the needs of trade, and it does so in myriad ways that are often difficult for a central bank to control because they reflect the responses of banks and other financial institutions to market incentives. But money’s role in circulation must be coordinated with its function as a store of value, and both must be coordinated with finance. Failure in coordination can lead to instability. The essays in this volume, by internationally renowned economists, provide original and contrasting analyses of these issues, presenting the points of view of the American Post-Keynesian approach on the one hand and the French circulation school on the other.

• Working Paper No.158 01 May 1996

  Capital Inflows and Macroeconomic Policy in Sub-Saharan Africa

  Louis Kasekende, Damoni Kitabire and Matthew Martin
  Abstract

  Little has been written about capital flows to sub-Saharan Africa (SSA), largely because of the flows’ small size
  and data limitations. In this working paper, Louis Kasekende, executive director for policy and research at the
  Bank of Uganda; Damoni Kitabire, commissioner for the Macroeconomic Policy Department for the Ministry
  of Finance and Economic Planning in Kampala; and Matthew Martin, Ministry of Finance, United Kingdom, explore these
  inflows, noting that although they are small compared to those into other countries, they are in proportion to the
  size of the recipient economies. The authors examine the scale and composition of capital inflows, their
  causes and sustainability, their effect on macroeconomic stability, and their responsiveness to policy measures
  for six SSA nations: Kenya, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe.

  Download Working Paper No. 158 PDF (3.69 MB)
• Working Paper No.157 01 May 1996

  A New Facility for the IMF?

  John Williamson
  Abstract

  In this working paper, John Williamson, senior fellow at the Institute for International Economics, evaluates
  proposals to create a short-term financing facility within the International Monetary Fund (IMF). The
  emphasis in this facility would be on the period within which the IMF would respond to a request for
  assistance, rather than on the duration of the loan.
  According to Williamson, there are two situations in which existing arrangements within the IMF do not allow for a response quick enough to be effective: when a country is attempting to defend a pegged exchange rate
  and when default is imminent. Some have suggested that any new facility be able to lend to alleviate these
  circumstances. Those who support freely floating exchange rates, however, are opposed to supporting a pegged
  rate regime and favor restricting such activity by any new facility. Others would support this activity by a new
  facility only in cases that pose a systemic threat.

  Williamson focuses on the broadest of the purposes that could be fulfilled by a new facility: assisting countries
  to finance capital flows judged to be unjustified by the fundamentals and therefore destabilizing. Proposals
  directed at fulfilling this purpose (which date back some years and have been enjoying a recent resurgence)
  stipulate the countries that should have access to such a facility, the terms and level of access, the maturity of
  loans, and the source of the facility’s financing.

  Download Working Paper No. 157 PDF (1.71 MB)
• Working Paper No.165 01 May 1996

  Economic Insecurity and the Institutional Prerequisites for Successful Capitalism

  Hyman P. Minsky and Charles J. Whalen
  Abstract

  In this working paper, Distinguished Scholar Hyman P. Minsky and Visiting Scholar Charles Whalen search for reasons to account for the split in post-World War II economic performance—that is, the difference in performance between the 1946–66 period and the 1966–96 period. The authors discuss a number of economic problems that have arisen during the past quarter of a century, including slower growth, stagnant earnings, rising financial instability, and increasing inequality. Minksy and Whalen concede that factors such as globalization and technological change have undoubtedly played a role in the split performance. An additional important and often overlooked element is the evolution of the US financial structure. The authors explain that a key component influencing the evolution of the financial sector during recent decades has been the rise of "money manager" capitalism. Important features of money manager capitalism are increased financial fragility (lower margins of safety in indebtedness and a greater reliance on debt relative to internal finance) and the introduction into the financial structure of a new layer of intermediation. In particular, managers of pensions, trusts, and mutual funds currently control the largest share of the liabilities of corporations. These managers are judged by only one criterion: how well they maximize the value of funds. As a result, business leaders have become increasingly sensitive to the stock market valuation of their firm.

  Download Working Paper No. 165 PDF (905.42 KB)
• Public Policy Brief No.25 05 April 1996

  Capital Gains Taxes and Economic Growth

  Steven M. Fazzari
  Abstract

  This brief assesses the effect of a capital gains tax cut on firms’ decisions to undertake new investment projects and the possible effect of such projects on economic growth and employment. The authors’ analysis takes into account such factors as projects’ degree of uncertainty, investors’ degree of risk aversion, whether capital gains losses are deductible against capital gains income, whether the market value of an investment project is affected by the imposition of capital gains taxes, and whether the project is financed by internal or external means. They find that there is little theoretical or empirical basis for the view that lowering the capital gains tax rate would have a substantial effect on economic growth or level of economic activity. They estimate that the current proposal to lower the highest capital gains tax rate from 28.0 percent to 19.8 percent would have a long-term effect on the level of output no greater than the impact of roughly two months of normal economic growth, and it would take years to realize even this small benefit. Indexing the rate to inflation would have a somewhat larger, but still small, effect. The authors conclude that capital gains taxes have a negligible influence on investment decisions and dispute the claim that a lower capital gains tax rate would have large beneficial effects on output, growth, or entrepreneurial activity in the US economy.

  Download Public Policy Brief No. 25, 1996 PDF (8.99 MB)
• Working Paper No.156 01 April 1996

  Understanding the 1994 Election

  Oren Levin-Waldman
  Abstract

  The change in the composition of Congress resulting from the 1994 election was viewed by some Republicans
  as a “triumph of conservatism over the perceived abuses of liberalism.” In this working paper, Resident Scholar
  Oren Levin-Waldman examines polling data to explore whether the rejection of Congressional incumbents
  was a function of their perceived corruption or a desire to elect representatives whose ideology better reflected
  those of the electorate. Levin-Waldman analyzes polling results in the context of two models that might explain
  the results of the 1994 election: a traditional model in which incumbents are rejected for failing to deliver on
  their campaign promises and a realignment model in which the rejection is part of a general pattern of political
  realignment.

  Realignments represent systemic changes in American politics, and they occur when an issue or issues polarizes voters significantly enough to motivate them to change
  party affiliation. Levin-Waldman points out that voter turnout in the 1994 election was not high. In addition, he notes that even
  if people were dissatisfied, there was no issue or set of issues that appeared to polarize voters. Neither the economy (and Clinton’s handling of it) nor family financial situations
  appear to have been critical issues for voters. Levin-Waldman also finds that a majority of respondents felt that neither party could do a better job than the
  other. However, in reply to questions about solving specific problems (such as unemployment and health care), most voters in 1994 said that Republicans could do a better job—a
  reversal from 1992, when most respondents felt that Democrats could do a better job.
  Given the overwhelming Democratic victory of that year, Levin-Waldman questions whether the 1994 victory
  represents a trend.

  Download Working Paper No. 156 PDF (2.95 MB)
• Working Paper No.155 01 April 1996

  Uncertainty and the Institutional Structure of Capitalist Economies

  Hyman P. Minsky
  Abstract

  In this new working paper, Distinguished Scholar Hyman P. Minsky points out that capitalism
  in the United States is an evolving construct that recently entered a new stage: “money
  manager” capitalism. In money manager capitalism, nearly all businesses are organized as
  corporations, pension and mutual funds are the predominant owners of financial assets, and
  managers of these funds are judged solely on the total return on fund assets (dividends and
  interest plus appreciation in share value). One consequence of such a structure is the
  predominance of short-run considerations in decision making.

  Public tolerance for uncertainty is limited. During the New Deal era it led to the creation of
  institutions and arrangements to create transparency in both financial markets and corporate
  governance; for example, crop insurance set floors to farmers’ incomes and deficits run by the
  federal government set floors to aggregate profit flows. However, the focus of money manager
  capitalism on short-run returns and uncompromised profit margins has increased economic
  uncertainty at the firm and plant levels through the chronic need to downsize overhead and
  reduce variable costs. These activities have unraveled the traditional relationships between firm
  and worker and increased economic insecurity among employees.

  Minsky asserts that existing institutions and programs cannot contain this uncertainty, and that new
  arrangements must be created to offset the effects on “losers” in the structure of money manager
  capitalism. He suggests that full-employment programs
  analogous to certain New Deal programs (e.g., the Work Progress Administration and the Civilian
  Conservation Corps) should be considered
  to meet this goal.

  Download Working Paper No. 155 PDF (56.29 KB)

• Public Policy Brief No.24 04 February 1996

  Revisiting Bretton Woods

  Raymond F. Mikesell
  Abstract

  Raymond F. Mikesell outlines the activities of the International Monetary Fund (IMF) and the World Bank over the course of their history and evaluates the organizations’ success in meeting their original and subsequent goals. He analyzes the debate over the IMF’s role in managing the international monetary system, managing currency crises, and providing credit to newly capitalist countries and examines proposals that the World Bank do more to promote private investment in developing countries, make more loans for expanding social and economic objectives, and improve the efficiency of its operations. Mikesell recommends that (1) the World Bank Group and IMF should be merged to form a single organization, the World Bank and Fund Group (WBFG); (2) neither the IMF nor the WBG should be given responsibility for establishing and managing an exchange rate target zone system or for stabilizing the exchange rates of the major currencies; (3) the establishment of additional institutional constructs to deal with financial crises should be deferred; (4) the WBG should move rapidly to change the composition of its lending by making fewer loans to governments and state enterprises and more loans to the private sector, including nongovernmental, nonprofit entities; and (5) the WBG should be gradually downsized by reducing the number of countries eligible for loans.

  Download Public Policy Brief No. 24, 1996 PDF (169.77 KB)
• Working Paper No.154 01 January 1996

  Unemployment, Inflation, and the Job Structure

  James K. Galbraith
  Abstract

  In this working paper, James K. Galbraith rejects the analytical construct within which many economists
  currently operate—that is, the construct in which, in the extreme, macroeconomic behavior is identical to the
  behavior reflected in microeconomic demand and supply curves. He rejects it on the theoretical and practical
  grounds that microeconomic categories (supply, demand, price, and quantities) “have little bearing on important
  policy questions.” The markets that have a bearing on policy either are asset markets (for which the rules are
  dramatically different from those for flow markets) or are not really markets at all, but rather a set of deeply
  structural social relations. According to such thinking, microeconomic issues become secondary in the policy
  arena and macroeconomic policy tools—spending, taxes, income policies, and interest rates—take the fore.

  Download Working Paper No. 154 PDF (2.48 MB)
• Working Paper No.153 01 December 1995

  Technology and the Demand for Skills

  Edward N. Wolff
  Abstract

  In this working paper Research Associate Edward N. Wolff documents changes during the period 1950–90 in aggregate skill levels of the workplace. Wolff investigates skill trends at the sectoral level, paying special
  attention to changes in skill requirements in service and goods-producing sectors, and examines the role of technological change in changing the demand for skills. He reports the results of a regression analysis in
  which he relates changes in skill indexes to various measures of technological activity.

  Download Working Paper No. 153 PDF (2.63 MB)
• Working Paper No.152 01 December 1995

  Reforming Unemployment Insurance

  Oren Levin-Waldman
  Abstract

  In this working paper Resident Research Associate Oren M. Levin-Waldman builds on earlier work (see Working Paper No. 140) to argue that the unemployment insurance (UI) system is in need of reform.
  At a minimum, Levin-Waldman states, the system “needs to be tightened in such a way that it results in fewer
  layoffs.” In addition, he says, it should be changed in order to offer greater assistance to the growing population of the
  long-term unemployed.

  Download Working Paper No. 152 PDF (3.74 MB)
• Working Paper No.151 01 December 1995

  The Working Poor and Welfare Recipiency

  Marlene Kim and Thanos Mergoupis
  Abstract

  Many participants in the current welfare debate assume that welfare recipients are taking unfair advantage of
  government programs by avoiding work. However, a growing body of research indicates that this assumption
  is untrue. In this working paper, Resident Scholar Marlene Kim and Thanos Mergoupis, of the Department of
  Economics at Rutgers University, show that many who qualify for benefits—food stamps, aid to families with
  dependent children (AFDC), and Medicaid—do not receive assistance. Moreover, many who qualify work many
  hours, are in families headed by married couples, are in their prime working years, and have at least a high
  school education.
  In their study of the decision

  Download Working Paper No. 151 PDF (2.30 MB)
• Working Paper No.150 01 December 1995

  Proposals for Changing the Functions of the International Monetary Fund (IMF)

  Raymond F. Mikesell
  Abstract

  The 50th anniversary of the signing of the Articles of
  Agreement of the International Monetary Fund (IMF) and the World
  Bank was celebrated at meetings in Washington, DC: at Bretton
  Woods, New Hampshire; and at the Annual Meeting of the Boards of
  Governors of the two institutions held in Madrid. The many addresses at the 1994
  meetings praising the contributions of the Fund and Bank were
  overshadowed by the widely held conviction that both institutions
  are seriously in need of overhauling. However, there is no consensus on how they should be changed. Some believe that one
  or both have outlived their usefulness and should be abolished,
  while others believe the institutions should continue to operate
  as in the past, but with new responsibilities and enhanced
  resources. This Working Paper is mainly concerned with proposals for major changes in the Fund, but because the proposals are also related to the operations of the Bank, a brief background
  on both institutions is included.

  Download Working Paper No. 150 PDF (3.54 MB)
• Working Paper No.149 01 December 1995

  Biennial Budgeting for the Federal Government

  Charles J. Whalen
  Abstract

  A two-year budget and appropriations cycle at the federal level has been endorsed by Republicans and
  Democrats during the past 20 years. The first congressional proposal for a federal biennial budget appeared in
  the late 1970s, and several others have since been submitted. There are two dominant models for a biennial
  budget: the stretch model, which expands action on the budget resolution over a two-year period, and the
  split-sessions model, which confines budget resolution and appropriations actions to the first session of
  Congress. In this working paper, Resident Scholar Charles J. Whalen reviews states’ experience with biennial
  budgeting and outlines policy implications of extending the budget period.

  Download Working Paper No. 149 PDF (2.23 MB)
• Book Series 01 December 1995

  Income and Employment in Theory and Practice

  Geoffrey Harcourt, Alessandro Roncaglia and Robin Rowley
  Abstract

  The essays in this volume were written by colleagues and friends of the late Athanasios (Tom) Asimakopulos. They relate to those areas to which he contributed so much in his teaching and his writings. Most of the essays are concerned with interpretations and extensions, both theoretical and empirical, of the work of Keynes, Kalecki, and Sraffa, and with the relationships among these three authors. Many take as their starting point Asimakopulos’s own interpretations and extensions of the work, of these authors. There is also an essay on public pensions, which was a long-standing interest of Asimakopulos and of his first mentor, the late J. C. Weldon. The essays reflect the belief that guided Asimakopulos’s work: that economic research plays a decisive role in the development of a civilized, humane society. The volume includes essays and comments by Louis Ascah, Paul Davidson, Gilles Dostaler, Terri Gigantes, Geoffrey Harcourt, Jan A. Kregel, Heinz Kurz, Dimitri B. Papadimitriou, Sergio Parrinello, Alessandro Roncaglia, Robin Rowley, Neri Salvadori, Claudio Sardoni, and Bertram Schefold.

• Working Paper No.148 01 November 1995

  Does an Independent Central Bank Violate Democracy?

  Joel Perlmann and Roger Waldinger
  Abstract

  The question of central bank independence is one of degree.
  A completely independent central bank is impossible as long as a
  country has provisions for altering central bank powers, even if
  that requires constitutional amendments. On the other hand, any
  central bank has at least some discretion in monetary policy
  unless it is either in the pocket of a dictator or required by
  mandate to follow a mechanical rule, such as the central bank in
  Argentina where monetary policy is effectively determined by the
  currency board.

  In the United States and many other countries, people
  question the degree of central bank independence, often citing
  the need to better insulate central bankers from pressure to
  serve either the political motives of government officials or the
  financial interests of private individuals and organizations.
  This school of thought argues that the central bank should be
  left alone to pursue one monetary policy goal: price stability.
  It is feared that either government officials with too much
  influence over central bankers or laws setting inappropriate
  priorities for them undermine this independence.
  The Federal Reserve already enjoys a good measure

  Download Working Paper No. 148 PDF (2.28 MB)
• Working Paper No.147 01 October 1995

  Capital Gains Tax Cuts, Investment, and Growth

  Steven M. Fazzari and Benjamin Herzon
  Abstract

  No further information available.

  Download Working Paper No. 147 PDF (2.94 MB)
• Public Policy Brief No.23 20 September 1995

  A Critical Imbalance in US Trade

  Wynne Godley
  Abstract

  According to Wynne Godley, the significance of the deficit in the United States’ balance of payments has been underestimated in both public policy and academic discussions, despite the fact that American markets are increasingly dominated by foreign manufacturers. Godley analyzes the problem posed by the current balance of payments deficit. Breaking down the current account into its component parts, he traces the cause of the deficit. He refutes the arguments of other economists that the balance of payments deficit is self-correcting, unimportant, or the result of other domestic forces (namely, too low a level of national saving), and outlines policy approaches to solving the problem. Godley notes that although the strategic problems posed are specific to this country and the United States may have to take unilateral action to solve them, the problems have arisen because there is no significant international regulation of the system as a whole. Inherent flaws have developed in the system of international production, trade, and payments as that system has expanded and become increasingly deregulated. “All the difficulties that exist, or that are foreshadowed in this brief, would be best resolved by energetic international cooperation, of which there is at present little sign.”

  Download Public Policy Brief No. 23, 1995 PDF (2.24 MB)
• Public Policy Brief No.22 19 September 1995

  Closing the R&D Gap

  Thomas Karier
  Abstract

  Both spending and tax policies have been implemented in the United States with the goal of stimulating private sector research and development (R&D). Thomas Karier questions whether current R&D policy, especially the research and experimentation tax credit, can contribute to closing the gap between nondefense expenditures on R&D in the United States and such expenditures in other countries, such as Japan and Germany. He also explores possible changes to our current R&D policy to make it more effective.

  Download Public Policy Brief No. 22, 1995 PDF (8.92 MB)
• Working Paper No.146 01 September 1995

  The Stock Market and the Corporate Sector

  Anwar M. Shaikh
  Abstract

  No further information available.

  Download Working Paper No. 146 PDF (1.22 MB)
• Working Paper No.145 01 August 1995

  Financial Derivatives

  Willem Thorbecke
  Abstract

  No further information available.

  Download Working Paper No. 145 PDF (1.56 MB)
• Working Paper No.144 01 July 1995

  The Distributional Effects of Disinflationary Monetary Policy

  Willem Thorbecke
  Abstract

  No further information available.