Thu. July 24, 2008
Explorations in Theory and Empirical Analysis
On occasion, scholars at the Levy Institute conduct research that does not fall within a current program or general topic area. Such study might include examination of a subject of particular policy interest, empirical research that has grown out of work in a current program area, or initial exploration in an area being considered for a new research program. Recent studies have included those on Harrodian growth models, the economic consequences of German reunification, and campaign finance reform.
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Program Publications |
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Working Papers | November 2007 Earnings Functions and the Measurement of the Determinants of Wage Dispersion This paper extends the famous Blinder and Oaxaca (1973) discrimination in several directions. First, the wage difference breakdown is not limited to two groups. [more] Working Paper No. 521 |
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Working Papers | November 2007 Nurkse and the Role of Finance in Development Economics Ragnar Nurkse was one the pioneers in development economics. This paper celebrates the hundredth anniversary of his birth with a critical retrospective of his overall contribution to the field, in particular his views on the importance of employment policy in mobilizing domestic resources and the difficulties surrounding the use of external resources to finance development. [more] Working Paper No. 520 |
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Working Papers | September 2007 The Continuing Legacy of John Maynard Keynes This working paper examines the legacy of Keynes’s General Theory of Employment, Interest, and Money (1936) on the occasion of the 70th anniversary of its publication and the 60th anniversary of Keynes’s death. The paper incorporates some of the latest research by prominent followers of Keynes, presented at the 9th International Post Keynesian Conference in September 2006. [more] Working Paper No. 514 |
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Working Papers | March 2007 Are the Costs of the Business Cycle “Trivially Small”? In his presidential address to the American Economic Association, Robert Lucas claimed that the welfare costs of the business cycle in the United States equaled .05 percent of consumption. [more] Working Paper No. 492 |
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Working Papers | November 2006 Methodology and Microeconomics in the Early Work of Hyman P. Minsky This paper reviews the recently published doctoral thesis of Hyman P. Minsky, summarizing its main contributions to methodology and microeconomics. [more] Working Paper No. 480 |
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Working Papers | August 2006 On the Minskyan Business Cycle The essential insight Minsky drew from Keynes was that optimistic expectations about the future create a margin, reflected in higher asset prices, which makes it possible for borrowers to access finance in the present. In other words, the capitalized expected future earnings work as the collateral against which firms can borrow in financial markets or from banks. [more] Working Paper No. 474 |
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Working Papers | June 2006 The Minskyan System, Part I This is the first part of a three-part analysis of the Minskyan framework. Via an extensive review of the literature, this paper looks at 12 essential elements necessary to get a good understanding of Minsky's theory, and argues that those elements are central to comprehend how a monetary production economy works. [more] Working Paper No. 452 |
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Working Papers | May 2006 Gibson’s Paradox II The Gibson paradox, long observed by economists and named by John Maynard Keynes (1936), is a positive relationship between the interest rate and the price level. This paper explains the relationship by means of interest-rate, cost-push inflation. [more] Working Paper No. 448 |
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Working Papers | March 2006 Tinbergen Rules the Taylor Rule This paper elaborates a simple model of growth with a Taylor-like monetary policy rule that includes inflation targeting as a special case. When the inflation process originates in the product market, inflation targeting locks in the unemployment rate prevailing at the time the policy matures. [more] Working Paper No. 444 |
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Working Papers | February 2006 Personality and Earnings This paper studies personality as a potential explanation for wage differentials between apparently similar workers. This follows initial studies by Jencks (1979) that suggest that certain personality traits, such as industriousness and leadership, have an impact on earnings. [more] Working Paper No. 443 |
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Working Papers | January 2006 Keynes's Approach to Money This paper first examines two approaches to money adopted by John Maynard Keynes in his General Theory (GT). The first is the more familiar “supply and demand” equilibrium approach of Chapter 13 incorporated within conventional macroeconomics textbooks. [more] Working Paper No. 438 |
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Working Papers | January 2006 Speculation, Liquidity Preference, and Monetary Circulation The sharp exchanges that Keynes had with some of his critics on the loanable funds theory made it harder to appreciate the degree to which his thought was continuous with the tradition of monetary analysis that emanates from Wicksell, of which Keynes’s A Treatise on Money was a part. In the aftermath of the General Theory (GT), many of Keynes’s insights in the Treatise were lost or abandoned because they no longer fit easily in the truncated theoretical structure he adopted in his latter work. [more] Working Paper No. 435 |
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Working Papers | November 2004 Measuring Capacity Utilization in OECD Countries This paper derives measures of potential output and capacity utilization for a number of OECD countries, using a method based on the cointegration relation between output and the capital stock. The intuitive idea is that economic capacity (potential output) is the aspect of output that co-varies with the capital stock over the long run. [more] Working Paper No. 415 |
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Working Papers | October 2004 Visions and Scenarios Ecological economics is a transdisciplinary alternative to mainstream environmental economics. Attempts have been made to outline a methodology for ecological economics and it is probably fair to say that, at this point, ecological economics takes a "pluralistic" approach. [more] Working Paper No. 413 |
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Book Series | August 2004 Induced Investment and Business Cycles This unique volume presents, for the first time in publication, the original doctoral thesis of Hyman P. Minsky, one of the most innovative thinkers on financial markets. [more] Book Series, August 2004 |
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Working Papers | April 2004 Some Simple, Consistent Models of the Monetary Circuit We address the finance motive and the determination of profits in the Monetary Theory of Production associated with the Circuitist School. We show that the "profit paradox" puzzle addressed by many authors who adopt this approach can be solved by integrating a simple Circuit model with a consistent set of stock-flow accounts. [more] Working Paper No. 405 |
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Public Policy Brief Highlights | November 2002 Physician Incentives In Managed Care Organizations This brief considers the interaction between physician incentive systems and product market competition in the delivery of medical services via managed care organizations. At the center of the analysis is the process by which health maintenance organizations (HMOs) assemble physician networks and the role these networks play in the competition for customers. [more] Public Policy Brief Highlights No. 70A, 2002 |
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Public Policy Briefs | November 2002 Physician Incentives In Managed Care Organizations This brief considers the interaction between physician incentive systems and product market competition in the delivery of medical services via managed care organizations. At the center of the analysis is the process by which health maintenance organizations (HMOs) assemble physician networks and the role these networks play in the competition for customers. [more] Public Policy Brief No. 70, 2002 |
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Working Papers | September 2002 Managed Care, Physician Incentives, and Norms of Medical Practice The incentive contracts that managed care organizations write with physicians have generated considerable controversy. Critics fear that if informational asymmetries inhibit patients from directly assessing the quality of care provided by their physician, competition will lead to a "race to the bottom" in which managed care plans induce physicians to offer only minimal levels of care. [more] Working Paper No. 353 |
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Working Papers | September 2002 Critical Realism and the Political Economy of the Euro This paper is concerned with two issues. First, it discusses some of the main problems and inferences the methodological approach of critical realism raises for empirical work in economics, while considering an approach adopted to try to overcome these problems. [more] Working Paper No. 352 |
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Working Papers | June 2002 Asset Prices, Liquidity Preference, and the Business Cycle In his Treatise on Money, John Maynard Keynes relied on two different premises to argue that the interest rate need not rise with rising levels of expenditure. One of these was the elasticity of the money supply, and the other was the interaction between financial and industrial circulation. [more] Working Paper No. 348 |
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Working Papers | June 2002 What Has Happened to Monetarism? It is widely perceived that today's conventional monetary wisdom, and the common practice of monetary policy based thereupon, is essentially "monetarist" by nature, if not by name. One objective of this paper is to assess whether monetarism has had a lasting effect on the theory and practice of monetary policy; another is to scrutinize the key dividing lines between Milton Friedman's monetary thought and that of John Maynard Keynes. [more] Working Paper No. 347 |
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Working Papers | October 2001 Incentives in HMOs We studied the effect of physician incentives in an HMO network. Physician incentives are controversial because they may induce doctors to make treatment decisions that differ from those they would choose in the absence of incentives. [more] Working Paper No. 340 |
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Working Papers | October 2001 Uncertainty, Conventional Behavior, and Economic Sociology This paper addresses the problem of the conceptualization of social structure and its relationship to human agency in economic sociology. The background is provided by John Maynard Keynes's observations on the effects of uncertainty and conventional behavior on the stock market; the analysis consists of a comparison of the social ontologies of the French Intersubjectivist School and the Economics as Social Theory Project in the light of these observations. [more] Working Paper No. 339 |
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Public Policy Brief Highlights | June 2001 Campaign Contributions, Policy Decisions, and Election Outcomes Proposals for campaign finance reform are essentially based on the belief that political influence can be bought with financial donations to a candidate’s campaign. But do contributions really influence the decisions of legislators once they are in office? In this brief, Christopher Magee examines the link between campaign donations and legislators’ actions. [more] Public Policy Brief Highlights No. 64A, 2001 |
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Public Policy Briefs | June 2001 Campaign Contributions, Policy Decisions, and Election Outcomes Proposals for campaign finance reform are essentially based on the belief that political influence can be bought with financial donations to a candidate’s campaign. But do contributions really influence the decisions of legislators once they are in office? In this brief, Christopher Magee examines the link between campaign donations and legislators’ actions. [more] Public Policy Brief No. 64, 2001 |
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Working Papers | March 2001 Part-year Operation in 19th Century American Manufacturing Using unpublished data contained in samples from the manuscripts of the 1870 and 1880 censuses of manufactures—the earliest comprehensive estimates available—this study examines the extent and correlates of part-year manufacturing during the late 19th century. While the typical manufacturing plant operated full-time, part-year operation was not uncommon; its likelihood of this varied across industries and locations and with plant characteristics. [more] Working Paper No. 327 |
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Book Series | February 2001 Corporate Governance and Sustainable Prosperity How can we explain the persistent worsening of the income distribution in the United States in the 1980s and 1990s? What are the prospects for the reemergence of sustainable prosperity in the American economy over the next generation? In addressing these issues, this book focuses on the microeconomics of corporate investment behavior, especially as reflected in investments in integrated skill bases, and the macroeconomics of household saving behavior, especially as reflected in the growing problem of intergenerational dependence of retirees on employees. Specifically, the book analyzes how the combines pressures of excessive corporate growth, international competition, and intergenerational dependence have influenced corporate investment behavior over the past two decades. [more] Book Series, February 2001 |
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Working Papers | December 2000 Origins of the GATT Fiftieth-anniversary explanations for the efficacy of the GATT imply that the institution's longevity is testimony to the free trade principles upon which it is based. In this light, the predominantly American architects of the system figure as free trade visionaries who benevolently imposed postwar institutions of international cooperation on their war-torn allies. [more] Working Paper No. 318 |
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Working Papers | November 2000 Productivity in Manufacturing and the Length of the Working Day Data from the manuscript census of manufacturing are used to estimate the effects of the length of the working day on output and wages. We find that the elasticity of output with respect to daily hours worked was positive but less than one—implying diminishing returns to increases in working hours. [more] Working Paper No. 317 |
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Working Papers | November 2000 Harrod versus Thirlwall This paper contrasts the different approaches to export-led growth used by Harrod and Thirlwall. It argues that, unlike Thirlwall's model, Harrod emphasized the importance of both demand- and supply-sides in his analysis of growth. [more] Working Paper No. 316 |
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Working Papers | August 2000 Profits Profits are the incentive for production and therefore employment in almost all of the world's economies; they also may represent exploitation of workers and consumers. Jerome Levy, using a complex process, derived the profits identity during the years 1908–1914. [more] Working Paper No. 309 |
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Working Papers | June 2000 "It" Happened, but Not Again This paper asks two questions: First, can we explain Japan's ongoing financial crisis by means of an institutional analysis similar to the one Hyman P. Minsky applied to the American economy during the postwar period? Second, what are the implications of this analysis for what is going on in the Canadian and American economies today?To answer the first question, we develop an interpretation of Japan's postwar history, in particular, the evolution of its financial institutions that we believe fits Minsky's institutional analysis. [more] Working Paper No. 303 |
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Working Papers | June 2000 Kaleckian Models of Growth in a Stock-flow Monetary Framework This paper presents a simple growth model grounded in a stock-flow monetary accounting framework. The framework ensures that all stocks and all flows are accounted for and that the real and financial sides of the economy are coherent with one another. [more] Working Paper No. 302 |
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Working Papers | May 2000 Trends in Direct Measures of Job Skill Requirements It is commonly assumed that jobs in the United Sates require ever greater levels of skill and, more strongly, that this trend is accelerating as a result of the diffusion of information technology. This has led to substantial concern over the possibility of a growing mismatch between the skills workers possess and the skills employers demand, reflected in debates over the need for education reform and the causes of the growth in earnings inequality. [more] Working Paper No. 301 |
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Working Papers | March 2000 The Public Commodities Problem The decision about how much to spend on a public program depends on the answers to two questions: Should the government pursue the goal of this program? Given that the program's goal should be adopted, what is the optimal level of spending to achieve it? If the answer to the first question is yes, it might seem desirable to set spending at the optimal level to achieve the goal. However, spending is often not set at that level, and there is likely to be an underfunding bias. [more] Working Paper No. 299 |
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Working Papers | December 1999 Why Do Political Action Committees Give Money to Candidates? This paper examines political action committees' motivations for giving campaign contributions to candidates for political office. First, the paper estimates the effect of campaign contributions received by candidates on the outcomes of the 1996 elections to the United States House of Representatives. [more] Working Paper No. 292 |
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Working Papers | July 1999 Minsky's Analysis of Financial Capitalism In this paper, the authors discuss Minsky's analysis of the evolution of one variety of capitalism—financial capitalism—which developed at the end of the nineteenth century and was the dominant form of capitalism in the developed countries after World War II. Minsky's approach, like those of Schumpeter and Veblen, emphasized the importance of market power in this stage of capitalism. [more] Working Paper No. 275 |
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Working Papers | March 1999 Real Exchange Rates and the International Mobility of Capital This paper demonstrates that the terms of trade are determined by the equalization of profit rates across international regulating capitals, for socially determined national real wages. This provides a classical/Marxian basis for the explanation of real exchange rates, based on the same principle of absolute cost advantage which rules national prices. [more] Working Paper No. 265 |
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Working Papers | February 1999 From Common Market to EMU This paper traces the history and the institutional background of European integration to the establishment of the economic and monetary union in the European Union (EU). After the establishment of the European Economic Community (EEC) in the late 1950s, attempts at monetary integration, and ultimately monetary union, tended to assume importance only as a result of financial crisis and then returned to being a vague objective as soon as the crisis recedes. [more] Working Paper No. 263 |
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Working Papers | January 1999 Theories of Value and the Monetary Theory of Production This paper extends earlier work that argued that liquidity preference theory should be interpreted as a theory of value. Here I will argue that two theories of value are needed for analysis of a monetary production economy: the labor theory of value and the liquidity preference theory of value. [more] Working Paper No. 261 |
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Public Policy Briefs | December 1998 Regulating HMOs HMO medicine sets up an inevitable conflict between the physicians’ traditional fiduciary role and the financial interests of the health plan and its physicians. Regulatory interventions, such as the formulation of rules regarding clinical practice, put government in a micromanagement role it cannot hope to perform well. [more] Public Policy Brief No. 47, 1998 |
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Public Policy Brief Highlights | December 1998 Regulating HMOs HMO medicine sets up an inevitable conflict between the physicians’ traditional fiduciary role and the financial interests of the health plan and its physicians. Regulatory interventions, such as the formulation of rules regarding clinical practice, put government in a micromanagement role it cannot hope to perform well. [more] Public Policy Brief Highlights No. 47A, 1998 |
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Working Papers | October 1998 Economic Time This paper argues that economists require a particular concept of time to develop theory with greater explanatory power in describing and analyzing the sort of economy in which we are primarily interested--the monetary economy usually termed capitalism. Economists of various persuasions have recognized the importance of a concept of time, but we argue that a very specific concept is required. [more] Working Paper No. 255 |
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Working Papers | October 1998 Toward a New Instrumental Macroeconomics This paper argues that the ideas of Abba Lerner and Adolph Lowe contain overlapping and complementary insights and themes that may contribute to the development of a new approach to macroeconomics. They also have rather specific practical policy implications. [more] Working Paper No. 254 |
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Working Papers | September 1998 Paul Davidson's Economics Paul 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. [more] Working Paper No. 251 |
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Working Papers | September 1998 Explaining Long-Term Exchange Rate Behavior in the United States and Japan Conventional 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. [more] Working Paper No. 250 |
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Working Papers | August 1998 "Inability to Be Self-Reliant" As an Indicator of U.S. Poverty The 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 prior years. [more] Working Paper No. 247 |
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Working Papers | July 1998 An Ethical Framework for Cost-Effective Medicine HMO 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. [more] Working Paper No. 239 |
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Working Papers | January 1998 The Kaleckian Analysis and the New Millennium Visiting Scholar Malcolm Sawyer, of the University of Leeds, commemorates Michal Kalecki's 100th birthday by considering how Kalecki's macroeconomic analysis of developed capitalist economies should be adapted in light of the institutional changes that have occurred since he did his major work. Sawyer believes that although Kalecki's reputation rests on his theoretical work, his theorizing was firmly based on his perceptions of the institutional, political, and social realities of the economies he sought to analyze. [more] Working Paper No. 223 |
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Working Papers | December 1997 Policy Innovation As a Discovery Procedure Economist Adolph Lowe's instrumental analysis examines the process of policy formulation as a regressive procedure of discovery. Taking as given a predetermined desired end state, the task of an innovator is to discover the technical and social path from the present position to the end state. [more] Working Paper No. 221 |
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Working Papers | November 1997 An Efficiency Argument for the Guaranteed Income Authors Karl Widerquist and Michael A. Lewis use a "multischool" approach to poverty policy, asking the following question: Given the many proposed causes for poverty, and the conflicting theories about how potential solutions would work, what conclusions can we draw about policy? They conclude that the guaranteed income is the most efficient and comprehensive policy to address poverty. [more] Working Paper No. 212 |
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Working Papers | May 1997 The Impact of Declining Union Membership on Voter Participation among Democrats No further information available. [more] Working Paper No. 193 |
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Working Papers | November 1996 What Do Micro Data Reveal about the User Cost Elasticity? The responsiveness of business investment to user costs (interest rates, taxes, and depreciation rates) is important in determining the effect of fiscal policy and aggregate stabilization policy on the economy and for assessing the transmission mechanism of monetary policy to real economic variables. Although this responsiveness is central to the theoretical underpinnings of most economic models, empirical support for substantial responsiveness is lacking. [more] Working Paper No. 175 |
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Working Papers | April 1996 Understanding the 1994 Election 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. [more] Working Paper No. 156 |
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Public Policy Briefs | September 1994 Linking Public Capital to Economic Performance 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. [more] Public Policy Brief No. 14, 1994 |
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Public Policy Briefs | May 1994 An Alternative in Small Business Finance 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 he |