Levy Economics Institute of Bard College

Public Policy Brief No.15 09 September 1994

Monetary Policy Uncovered

Dimitri B. Papadimitriou and L. Randall Wray

Abstract

Experience with a variety of targets has cast doubt on the likelihood that a single variable can be found to be closely and reliably linked to future inflation; it is even less likely that such a variable, should it be found, would somehow be under the control and manipulation of the Federal Reserve. This brief provides a review of the experiments with various targets undertaken by former Fed Chairman Paul Volcker and current Chairman Alan Greenspan. The authors contend that there is no reason to suppose that the Fed will discover a target variable whose control will yield stable prices. Finally, they conclude that economists lack sufficient information to calculate the costs of achieving stable prices in terms of unemployment and lost output.

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Public Policy Brief No.14 08 September 1994

Linking Public Capital to Economic Performance

Sharon J. Erenburg

Abstract

Following up on findings by J. Bradford DeLong and Lawrence Summers that a robust statistical relationship exists between productivity and private sector investment in plant and equipment, the author explores whether there is also a connection between economic growth and public spending. She argues that public investment in infrastructure stimulates private sector investment in plant and equipment. By providing empirical proof that public and private investment are complements in production, Erenburg supplies the missing link that explicitly ties public infrastructure to economic growth.

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Working Paper No.125 01 September 1994

Profit Sharing and Gainsharing

Derek C. Jones, Takao Kato and Jeffrey Pliskin

Abstract

No further information available.

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Working Paper No.124 01 September 1994

Flying Blind

Dimitri B. Papadimitriou and L. Randall Wray

Abstract

No further information available.

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Working Paper No.123 10 August 1994

The Utilization of US Male Labor, 1975–1992

Lawrence Buron, Robert Haveman and Owen O'Donnell

Abstract

No further information available.

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Working Paper No.122 01 August 1994

Recent Trends in US Male Work and Wage Patterns

Lawrence Buron, Robert Haveman and Owen O'Donnell

Abstract

No further information available.

Working Paper No.121 10 July 1994

The Timing of Promotion to Top Management in the US and Japan

Takao Kato and Larry W. Taylor

Abstract

No further information available.

Working Paper No.120 21 June 1994

The Productivity Convergence Debate

Bruce Elmslie and William Milberg

Abstract

No further information available.

Public Policy Brief No.13 07 June 1994

Investment Tax Credit Reconsidered

Thomas Karier

Abstract

In this brief, Thomas Karier explores the efficacy of the investment tax credit (ITC) in stimulating private investment spending. He notes that there are three possible channels through which an ITC can act on investment: price, income, and multiplier effects. He finds that ITCs do not appear to have had a significant effect on equipment investment; that the effects of a decline in corporate tax rates (the income effect) were distributed among increased dividends and fewer equity and debt issuances and had little influence on investment; and that capacity utilization and real GDP growth were the only business cycle variables that had a significant effect on equipment investment growth. Based on these findings, Karier concludes that alternatives to tax investment credit programs must be found and pursued. He suggests undertaking a modest program of direct public investment financed by rearranging spending priorities within the budget; a more expansive program could be financed through additional borrowing or through an increase in the corporate income tax.

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Working Paper No.119 04 June 1994

Liquidity, Uncertainty, and the Declining Predictive Power of the Paper-bill Spread

Ravi Chahil, J. Peter Ferderer and Stephen C. Vogt

Abstract

No further information available.

Working Paper No.118 03 June 1994

The Rhetoric of Policy Relevance in International Economics

William Milberg

Abstract

No further information available.

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Book Series 01 June 1994

Aspects of Distribution of Wealth and Income

Dimitri B. Papadimitriou

Abstract

The essays in this volume explore several aspects of wealth and income distribution during the 1980s, a decade characterized not only by economic expansion, but also by a widening disparity of income and wealth. The changing fortunes of American households and individuals as manifested in demographic and structural changes are examined from different perspectives, and factors affecting saving behavior and poverty rates and earning gaps relating to gender, education, and race of the head of household are examined. The observed inequalities are compared with those of other industrialized nations, and policies to remedy these developments are suggested. Among the contributors are Robert B. Avery, Rebecca M. Blank, Alan S. Blinder, Gordon Green, Thomas Juster, James Morgan, Edmund Phelps, Isabel V. Sawhill, Paul Sarbanes, Erik Thorbecke, and Howard Wachtel.

Public Policy Brief No.12 06 May 1994

An Alternative in Small Business Finance

Dimitri B. Papadimitriou, Ronnie J. Phillips and L. Randall Wray

Abstract

At a time when small businesses are suffering from a credit crunch, “niche” financial institutions are filling the void left by more traditional sources of financing, such as commercial banks. The authors argue that the most important of these niche players are community-based factor companies, which are rapidly expanding from their client base in apparel and textiles to finance a range of firms in everything from electronics to health care. The purchase of accounts receivable by factors enhances the balance sheets of their clients, making it easier for the clients to obtain bank financing. Also, because factors are more interested in the creditworthiness of a client’s customers than of the client itself, they are willing to extend loans in excess of collateral to rapidly growing businesses. Because factors are becoming an increasingly important source of financing for small and start-up businesses, the authors propose that factors be encouraged to play a broader role in financing firms in distressed communities by (1) making some factors eligible for funding and assistance under legislation regulating community development financial institutions and (2) by allowing investments by banks in factors to count toward compliance under the Community Reinvestment Act.

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Working Paper No.117 01 May 1994