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One Pager No.15
14 October 2011
Dawn of a New Day for Europe?
AbstractFailure on the part of EU leaders to address the eurozone crisis is in large part due to the fact that Germany and France are at opposite poles—politically, economically, and culturally. In this context, the announcement by Germany’s Angela Merkel and French President Nicolas Sarkozy that they’ve agreed to a comprehensive package of proposals to solve the eurozone debt crisis is definitely a positive development. It indicates that they have set aside their disagreements—surely no small feat, since domestic political concerns have been pulling the two in completely opposite directions—in order to provide the leadership necessary for euro stability.
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One Pager No.15
14 October 2011
H αυγή μιας νέας ημέρας για την Ευρώπη
AbstractΗ αποτυχία εκ μέρους των ηγετών της ΕΕ να αντιμετωπίσουν αποτελεσματικά την κρίση της ευρωζώνης έχει να κάνει σε μεγάλο βαθμό με το γεγονός ότι η Γερμανία και η Γαλλία βρίσκονται σε αντίθετους πόλους—πολιτικά, οικονομικά και πολιτιστικά. Στο πλαίσιο αυτό, η ανακοίνωση που έγινε από την Μέρκελ και τον Σαρκοζί πως έχουν συμφωνήσει σε ένα συνολικό πακέτο προτάσεων για την επίλυση της κρίσης χρέους στην ευρωζώνη είναι σίγουρα μια θετική εξέλιξη.
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Public Policy Brief No.120
13 October 2011
Waiting for the Next Crash
AbstractSenior Scholar L. Randall Wray lays out the numerous and critical ways in which we have failed to learn from the latest global financial crisis, and identifies the underlying trends and structural vulnerabilities that make it likely a new crisis is right around the corner. Wray also suggests some policy changes that would shore up the financial system while reinvigorating the real economy, including the clear separation of commercial and investment banking, and a universal job guarantee.
Download Public Policy Brief No. 120, 2011 PDF (324.50 KB) -
Working Paper No.692
12 October 2011
Quality of Match for Statistical Matches Used in the Development of the Levy Institute Measure of Time and Income Poverty (LIMTIP) for Argentina, Chile, and Mexico
AbstractThe quality of match of three statistical matches used in the LIMTIP estimates for Argentina, Chile, and Mexico is described. The first match combines the 2005 Uso del Tiempo (UT 2005) with the 2006 Encuesto Annual de Hogares (EAH) for Argentina. The second match combines the 2007 Encuesta Experimental sobre Uso del Tiempo en el Gran Santiago (EUT 2007) with the 2006 Encuesta Caracteristización Socioeconómica Nacional (CASEN 2006) for Chile. The third match combines the 2008 Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH 2008) with the 2009 Encuesta Nacional sobre Uso del Tiempo (ENUT 2009) for Mexico. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. In each case, the matches are of high quality, given the nature of the source datasets.
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Working Paper No.691
12 October 2011
Unpaid and Paid Care
AbstractTransforming care for children and the elderly from a private to a public domain engenders a series of benefits to the economy that improve our standard of living. We assess the positive impacts of social care from both receivers’ and providers’ points of view. The benefits to care receivers are various, ranging from private, higher returns to education to enhancing subjective well-being and health outcomes. The economy-wide spillovers of the benefits are noteworthy. Early childhood education reduces costs of law enforcement and generates higher long-term economic growth. Home-based health care lowers absenteeism and job losses that otherwise undermine labor productivity, providing adequate care at a lower cost and delaying admission into high-cost institutional care. Social care improves mothers’ labor-market attachment with higher lifetime income; it also lowers physical and psychological burdens of elder care that are becoming more prevalent with an aging population. Social care investment creates more job opportunities than other public spending, especially for workers from poor households and with low levels of educational attainment. The broad contributions of social care to our standard of living should be recognized in the public discourse, particularly in this era of fiscal austerity.
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One Pager No.14
11 October 2011
Neoliberalism and the State of the Advanced World Economy
AbstractWhoever said that economic science is free of ideological bias and political prejudice? Three hundred years of financial and economic crises have meant nothing to die-hard neoliberals, who believe in (among other things) self-regulating markets and trickle-down theory. With so many incorrect assumptions guiding market liberalism, it’s no wonder neoliberals have failed to draw the proper lessons from the Great Depression and turned a blind eye to the real causes of the global financial crisis of 2007–08 and the ensuing recession.
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One Pager No.14
11 October 2011
Νεοφιλελευθερισμός και η κατάσταση της προηγμένης παγκόσμιας οικονομίας
AbstractΠοιος είπε ότι η οικονομική επιστήμη δεν είναι ιδεολογικά προκατειλημμένη και δεν πάσχει από πολιτική μεροληψία; Τριακόσια χρόνια χρηματοπιστωτικων και οικονομικών κρίσεων δε λένε απολύτως τίποτα στους αδιάλλακτους νεοφιλελεύθερους, που πιστεύουν (ανάμεσα σε άλλα πράγματα) στην ιδέα της ύπαρξης μιας αυτορρυθμιζόμενης αγοράς και στη θεωρία της προς τα κάτω διαρροής του πλούτου. Mε τόσες πολλές λανθασμένες υποθέσεις να καθοδηγούν τον αγοραίο φιλελευθερισμό, δεν προκαλεί απορία το γεγονός γιατί οι νεοφιλελεύθεροι έχουν αποτύχει να βγάλουν τα σωστά συμπεράσματα από την εμπειρία της Mεγάλης Yφεσης του `30 και κάνουν τα στραβά μάτια στις πραγματικές αιτίες της παγκόσμιας χρηματοοικονομικής κρίσης του 2007–08 και στην οικονομική υποχώρηση που ακολούθησε.
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Working Paper No.690
05 October 2011
The Measurement of Time and Income Poverty
AbstractOfficial poverty thresholds are based on the implicit assumption that the household with poverty-level income possesses sufficient time for household production to enable it to reproduce itself as a unit. Several authors have questioned the validity of the assumption and explored alternative methods to account for time deficits in the measurement of poverty. I critically review the alternative approaches within a unified framework to highlight the commonalities and relative merits of individual approaches. I also propose a two-dimensional, time-income poverty measure that accounts for intrahousehold disparities in the division of household labor and briefly discuss its uses in thinking about antipoverty policies.
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One Pager No.13
30 September 2011
Social Security Data Belie Loopy Claims of a Fraud
AbstractResearch Scholar Greg Hannsgen and President Dimitri B. Papadimitriou disprove claims made by Social Security skeptics that the program is nothing more than a “Ponzi scheme.”
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One Pager No.13
30 September 2011
Τα στοιχεία για την κοινωνική ασφάλιση διαψεύδουν τους παλαβούς ισχυρισμούς περί απάτης
AbstractΟ ερευνητής Greg Hannsgen και ο πρόεδρος Δημήτρης Β. Παπαδημητρίου διαψεύδουν τους ισχυρισμούς από τους σκεπτικιστές της Κοινωνικής Ασφάλισης ότι το πρόγραμμα δεν είναι τίποτα περισσότερο από ένα «σχέδιο Πόνζι».
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Working Paper No.688
27 September 2011
An Unblinking Glance at a National Catastrophe and the Potential Dissolution of the Eurozone
AbstractAccording to author and journalist C. J. Polychroniou, Greece was unfit to join the euro: its entry was orchestrated by fabricating the true state of the country’s fiscal condition, and its subsequent “growth performance” rested upon heavy state borrowing and European Union (EU) transfers. Moreover, the Greek economic crisis is also a political and moral crisis, as financial scandals and corruption have been major sources of wealth creation.
The EU and International Monetary Fund bailout plan (May 2010), which includes a structural adjustment program with harsh austerity measures, has been a social and economic catastrophe. Such policy ensures that Greece will default and be forced to exit the euro, says Polychroniou, but compelling Greek citizens to take charge of their own economic problems and national faults may be the best scenario. Extreme EU neoliberal policies also increase the risk of the eurozone’s dissolution.
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Working Paper No.688
27 September 2011
Μια σταθερή ματιά σε μια εθνική καταστροφή και η πιθανή διάλυση της ευρωζώνης
AbstractΗ Ελλάδα εντάχθηκε στην ευρωζώνη όχι μόνο με μαγειρεμένα στατιστικά αρχεία αλλά με μια οικονομία που ήταν ακατάλληλη για τις απαιτήσεις και τις προσδοκίες μιας ενοποιημένης αγοράς με ένα ενιαίο σκληρό νόμισμα. Επιπλέον, η χώρα έχει μια πολιτική τάξη που είναι διαβόητα διεφθαρμένη, μια δημόσια διοίκηση που ο τρόπος λειτουργίας του διακωμωδεί την αποτελσματικότητα και την παραγωγικότητα, και μια συνολική πολιτική κουλτούρα που είναι εξαρτημένη από την πελατειακή πολιτική, ευημερεί με βάση την φοροδιαφυγή και την ανομία και στερείται οποιαδή̟ποτε αίσθηση κοινωνικού συμφέροντος και κοινωνικής ευθύνης. Η κρίση χρέους, που ξέσπασε το 2009, και τώρα έχει φέρει τη χώρα στο χείλος μιας μεγάλης κλίμακας εθνική καταστροφή, είναι απόρρεια ενός απίστευτα διεφθαρμένου πολιτικού συστήματος και των επιπτώσεων του νεοφιλελεύθερου οικονομικού περιβάλλοντος. Η Ελλάδα μετατρέπεται τώρα, χάρη στους αρχηγούς της ΕΕ και του ΔΝΤ και σε μια κυβέρνηση που παρέδωσε την εθνική κυριαρχία στα διεθνή κέντρα πολιτικής και οικονομικής ισχύος, σε προτεκτοράτο της ΕΕ και πιο ακριβέστερα, σε μπανανία των κυρίαρχων δυνάμεων ης ΕΕ.
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Working Paper No.687
21 September 2011
Access to Markets and Farm Efficiency
AbstractThis paper presents an empirical investigation of the relationship between the spread, spatially and temporally, of market institutions and improvements in the productivity and efficiency of farmers. The data used in this study were collected over two decades in a sample of rice farms in the Bicol Region of the Philippines. Our estimates reveal a significant inverse relationship between distance from the market and farm productivity and efficiency in 1983. While there are substantial improvements in yields, unit costs, and efficiency in the two decades that followed, the gains are larger in the more remote and sparsely populated villages. This finding suggests that the relationship between remoteness and farm outcomes has weakened over time. We also find that the development of markets in the peripheral villages and the improved connectivity between the peripheral villages and market centers are facilitated by population growth, infrastructural investments (specifically, irrigation and roads), and the availability of agricultural extension programs.
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Working Paper No.686
21 September 2011
Estimating the Impact of the Recent Economic Crisis on Work Time in Turkey
AbstractThis paper provides estimates of the impact of the recent economic crisis on paid and unpaid work time in Turkey. The data used in this study come from the first and only time-use survey available at the national level. Infrequency of collection of time-use data in Turkey does not allow us to make a direct comparison of pre- versus postcrisis time-use patterns. We introduce a tractable way for estimating these possible effects by measuring the impact of an increase in unemployment risk on time-use patterns of women and men living in couple households. The method developed here can be applied to other developing-country cases where there is a lack of longitudinal data availability. Our findings support the argument that economic crises reinforce the preexisting gender inequalities in work time.
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Working Paper No.685
07 September 2011
Quantitative Easing, Functional Finance, and the “Neutral” Interest Rate
AbstractThe main purpose of this study is to explore the potential expansionary effect stemming from the monetization of debt. We develop a simple macroeconomic model with Keynesian features and four sectors: creditor households, debtor households, businesses, and the public sector. We show that such expansionary effect stems mainly from a reduction in the financial cost of servicing the public debt. The efficacy of the channel that allegedly operates through the compression of the risk/term premium on securities is found to be ambiguous. Finally, we show that a country that issues its own currency can avoid becoming stuck in a structural “liquidity trap,” provided its central bank is willing to monetize the debt created by a strong enough fiscal expansion.
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Working Paper No.684
07 September 2011
Central Banking in an Era of Quantitative Easing
AbstractThis paper reviews the key insights of Hyman P. Minsky in arguing why finance cannot be left to free markets, drawing on the East Asian development experience. The paper suggests that Minsky’s more complete stock-flow consistent analytical framework, by putting finance at the center of analysis of economic and financial system stability, is much more pragmatic and realistic compared to the prevailing neoclassical analysis. Drawing upon the East Asian experience, the paper finds that Minsky’s analysis has a system-wide slant and correctly identifies Big Government and investment as driving employment and profits, respectively. Specifically, his two-price system can aid policymakers in correcting the systemic vulnerability posed by asset bubbles. By concentrating on cash-flow analysis and funding behaviors, Minsky’s analysis provides the link between cash flows and changes in balance sheets, and therefore can help identify unsustainable Ponzi processes. Overall, his multidimensional analytical framework is found to be more relevant than ever in understanding the Asian crisis, the 2008 global financial crisis, and policymaking in the postcrisis world.
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Working Paper No.683
07 September 2011
Permanent and Selective Capital Account Management Regimes as an Alternative to Self-Insurance Strategies in Emerging-market Economies
AbstractCurrency market intervention–cum–reserve accumulation has emerged as the favored “self-insurance” strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed consideration, especially in the absence of fundamental reform of the global monetary and financial order. Mainstream arguments in favor of financial globalization are found unconvincing; any indirect benefits allegedly obtainable through hot money inflows are equally obtainable without actually tolerating such inflows. The paper investigates the experiences of Brazil, Russia, India, and China (the BRICs) in the global crisis and subsequent recovery, focusing on their respective policies regarding capital flows.
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Public Policy Brief No.119
25 August 2011
The Contradictions of Export-led Growth
AbstractThe export-led growth paradigm is a development strategy aimed at growing productive capacity by focusing on foreign markets. It rose to prominence in the late 1970s and became part of a new consensus among economists about the benefits of economic openness.
According to Thomas I. Palley, this paradigm is no longer relevant because of changed conditions in both emerging-market (EM) and developed economies. He outlines the stages of the export-led growth paradigm leading to its adoption worldwide, as well as the various critiques of this agenda that have become increasingly prescient. He concludes that we should reduce reliance on strategies aimed at attracting export-oriented foreign direct investment and institute a new paradigm based on a domestic demand–led growth model. Otherwise, the global economy is likely to experience asymmetric stagnation and increased economic tensions between EM and industrialized economies.
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Public Policy Brief No.119
25 August 2011
Οι αντιφάσεις της εξαγωγικής ανάπτυξης
AbstractΤο μοντέλο της εξαγωγικής ανάπτυξης είναι μια αναπτυξιακή στρατηγική που στοχεύει σε αυξανόμενη παραγωγική ικανότητα εστιάζοντας στις ξένες αγορές. Κυριάρχησε προς το τέλος της δεκαετίας του ’70 και έγινε μέρος μιας καινούργιας συναίνεσης ανάμεσα στους οικονομολόγους σχετικά με τα οφέλη του διεθνούς «ανοίγματος» της οικονομίας.
Σύμφωνα με τον Thomas I. Palley, το μοντέλο αυτό έχει εξαντλήσει τα περιθώρια του λόγω των μεταβαλλόμενων συνθηκών στις οικονομίες αναδυόμενων αγορών καθώς και στις ανεπτυγμένες οικονομίες. Ο συγγραφέας σκιαγραφεί τα στάδια εξέλιξης του μοντέλου της εξαγωγικής ανάπτυξης που οδήγησαν στην υιοθέτησή του παγκοσμίως, καθώς και τις διάφορες επικρίσεις κατά της ατζέντας που έχουν γίνει αρκετά προφητικές. Ολοκληρώνει με το επιχείρημα ότι θα πρέπει να μειώσουμε την εξάρτηση σε στρατηγικές που στοχεύουν στην προσέλκυση άμεσων ξένων επενδύσεων με εξαγωγικό προσανατολισμό και να θεσπίσουμε ένα νέο παράδειγμα στηριζόμενο στο μοντέλο της ανάπτυξης της εγχώριας ζήτησης. Διαφορετικά, είναι πολύ πιθανό να βιώσει η παγκόσμια οικονομία ασυμμετρική στασιμότητα και αυξανόμενες οικονομικές εντάσεις μεταξύ αναδυόμενων αγορών και βιομηχανικών οικονομιών.
Download Κείμενο (Brief) Δημόσιας Πολιτικής Νο. 119 PDF (1.41 MB) -
Working Paper No.682
19 August 2011
Infinite-variance, Alpha-stable Shocks in Monetary SVAR
AbstractThis paper adumbrates a theory of what might be going wrong in the monetary SVAR literature and provides supporting empirical evidence. The theory is that macroeconomists may be attempting to identify structural forms that do not exist, given the true distribution of the innovations in the reduced-form VAR. The paper shows that this problem occurs whenever (1) some innovation in the VAR has an infinite-variance distribution and (2) the matrix of coefficients on the contemporaneous terms in the VAR’s structural form is nonsingular. Since (2) is almost always required for SVAR analysis, it is germane to test hypothesis (1). Hence, in this paper, we fit α-stable distributions to VAR residuals and, using a parametric-bootstrap method, test the hypotheses that each of the error terms has finite variance.
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Working Paper No.681
12 August 2011
Lessons We Should Have Learned from the Global Financial Crisis but Didn’t
AbstractThis paper begins by recounting the causes and consequences of the global financial crisis (GFC). The triggering event, of course, was the unfolding of the subprime crisis; however, the paper argues that the financial system was already so fragile that just about anything could have caused the collapse. It then moves on to an assessment of the lessons we should have learned. Briefly, these include: (a) the GFC was not a liquidity crisis, (b) underwriting matters, (c) unregulated and unsupervised financial institutions naturally evolve into control frauds, and (d) the worst part is the cover-up of the crimes. The paper argues that we cannot resolve the crisis until we begin going after the fraud, and concludes by outlining an agenda for reform, along the lines suggested by the work of Hyman P. Minsky.
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Working Paper No.681
12 August 2011
Μαθήματα που θα έπρεπε να παίρναμε από την παγκόσμια χρηματοοικονομική κρίση αλλά δεν το κάναμε
AbstractΗ εργασία αυτή ξεκινάει μετρώντας ξανά τα αίτια και τις συνέπειες της παγκόσμιας χρηματοοικονομικής κρίσης (ΠΧΚ). Το γεγονός που πυροδότησε την κρίση ήταν, φυσικά, το ξεδίπλωμα της κρίσης στα στεγαστικά δάνεια υψηλού κινδύνου (subprimes). Εντούτοις, το άρθρο υποστηρίζει ότι το χρηματοοικονομικό σύστημα ήταν ήδη τόσο εύθραυστο που σχεδόν οτιδή̟ποτε θα μπορούσε να είχε προκαλέσει την κατάρρευση. Στη συνέχεια, αξιολογεί τα μαθήματα που θα έπρεπε να έχουμε πάρει από την κρίση. Εν συντομία, αυτά συμπεριλαμβάνουν: (α) η ΠΧΚ δεν ήταν μια κρίση ρευστότητας, (β) η στάθμιση των οικονομικών κινδύνων (underwriting) παίζει ρόλο, (γ) αρρύθμιστοι και ανεπιτήρητοι χρηματοοικονομικοί θεσμοί εξελίσσονται με φυσικό τρόπο σε οργανισμούς ελέγχου απάτης, και (δ) το χειρότερο μέρος είναι το κουκούλωμα των εγκλημάτων. Το άρθρο προβάλλει το επιχείρημα ότι δεν μπορούμε να λύσουμε την κρίση έως ότου χτη̟πήσουμε την απάτη και ολοκληρώνει με το περίγραμμα μιας αντζέντας για μεταρρύθμιση στο ̟πλαίσιο της εργασίας του Χάιμαν Μίνσκυ.
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One Pager No.12
11 August 2011
Not Your Father’s Recession
AbstractPresident Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen make the case that the recession has turned into a prolonged and very unusual slump in growth, preventing a labor-market recovery—and the government lags far behind in creating the new jobs needed to deal with this disaster.
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One Pager No.12
11 August 2011
Δεν πρόκειται για τη συνηθισμένη ύφεση
AbstractΟ πρόεδρος Δημήτρης Β. Παπαδημητρίου και ο Μελετητής Έρευνας Greg Hannsgen επιχειρηματολογούν ότι η οικονομική υποχώρηση έχει μετατρα̟πεί σε μια παρατεταμένη και πολύ ασυνήθιστη κάμψη της ανάπτυξης, αποτρέποντας μια ανάκαμψη της αγοράς εργασίας—και η κυβέρνηση βρίσκεται πολύ ̟πίσω στην προσπάθεια της δημιουργίας των νέων θέσεων εργασίας που απαιτούνται για να αντιπετωπιστεί αυτή η καταστροφή.
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