Mon. February 8, 2010
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Working Papers
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February 2010
The Global Crisis and the Future of the Dollar: Toward Bretton Woods III? This paper investigates the United States dollar’s role as the international currency of choice as a key contributing factor in critical global developments that led to the crisis of 2007–09, and considers the future role of the dollar as the global economy emerges from that crisis. It is argued that the dollar is likely to retain its hegemonic status for a few more decades, but that United States spending powered by public rather than private debt would provide a more sustainable motor for global growth. [more] Working Paper No. 584 |
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Working Papers | November 2009 The Euro and Its Guardian of Stability: The Fiction and Reality of the 10th Anniversary Blast This paper investigates why Europe fared particularly poorly in the global economic crisis that began in August 2007. It questions the self-portrait of Europe as the victim of external shocks, pushed off track by reckless policies pursued elsewhere. [more] Working Paper No. 583 |
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Working Papers | November 2009 Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis The recent revival of Hyman P. Minsky’s ideas among policymakers, economists, bankers, financial institutions, and the mass media, synchronized with the increasing gravity of the subprime financial crisis, demands a reappraisal of the meaning and scope of the “financial instability hypothesis” (FIH). [more] Working Paper No. 582 |
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Working Papers | October 2009 Lessons from the New Deal Since the current recession began in December 2007, New Deal legislation and its effectiveness have been at the center of a lively debate in Washington. This paper emphasizes some key facts about two kinds of policy that were important during the Great Depression and have since become the focus of criticism by new New Deal critics: (1) regulatory and labor relations legislation, and (2) government spending and taxation. [more] Working Paper No. 581 |
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Working Papers | October 2009 An Alternative View of Finance, Saving, Deficits, and Liquidity This paper contrasts the orthodox approach with an alternative view on finance, saving, deficits, and liquidity. The conventional view on the cause of the current global financial crisis points first to excessive United States trade deficits that are supposed to have “soaked up” global savings. [more] Working Paper No. 580 |
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Working Papers | October 2009 A Perspective on Minsky Moments: The Core of the Financial Instability Hypothesis in Light of the Subprime Crisis This paper aims to help bridge the gap between theory and fact regarding the so-called “Minsky moments” by revisiting the “financial instability hypothesis” (FIH). We limit the analysis to the core of FIH—that is, to its strictly financial part. [more] Working Paper No. 579 |
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Working Papers | September 2009 Money Manager Capitalism and the Global Financial Crisis This paper applies Hyman Minsky’s approach to provide an analysis of the causes of the global financial crisis. Rather than finding the origins in recent developments, this paper links the crisis to the long-term transformation of the economy from a robust financial structure in the 1950s to the fragile one that existed at the beginning of this crisis in 2007. [more] Working Paper No. 578 |
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Working Papers | September 2009 Explaining the Gender Wage Gap in Georgia This paper evaluates gender wage differentials in Georgia between 2000 and 2004. Using ordinary least squares, we find that the gender wage gap in Georgia is substantially higher than in other transition countries. [more] Working Paper No. 577 |
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Working Papers | September 2009 A Financial Sector Balance Approach and the Cyclical Dynamics of the U.S. Economy This paper investigates the relationship between asset markets and business cycles with regard to the United States economy. We consider the Goldman Sachs approach (2003) developed to study the dynamics of financial balances. [more] Working Paper No. 576 |
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Working Papers | August 2009 Market Failure and Land Concentration Utilizing a 2002 household-level World Bank Survey for rural Turkey, this paper explores the link between concentration of land ownership and rural factor markets. We construct a unique index that measures market malfunctioning based on the neoclassical model linking land and labor endowments through factor markets to household income. [more] Working Paper No. 575 |
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Working Papers | August 2009 A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective, Part I This four-part study is a critical analysis of several reports dealing with the reform of the financial system in the United States. The study uses Minsky’s framework of analysis and focuses on the implications of Ponzi finance for regulatory and supervisory policies. [more] Working Paper No. 574.1 |
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Working Papers | August 2009 A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective, Part II This four-part study is a critical analysis of several reports dealing with the reform of the financial system in the United States. The study uses Minsky’s framework of analysis and focuses on the implications of Ponzi finance for regulatory and supervisory policies. [more] Working Paper No. 574.2 |
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Working Papers | August 2009 A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective, Part III This four-part study is a critical analysis of several reports dealing with the reform of the financial system in the United States. The study uses Minsky’s framework of analysis and focuses on the implications of Ponzi finance for regulatory and supervisory policies. [more] Working Paper No. 574.3 |
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Working Papers | August 2009 A Critical Assessment of Seven Reports on Financial Reform: A Minskyan Perspective, Part IV This four-part study is a critical analysis of several reports dealing with the reform of the financial system in the United States. The study uses Minsky’s framework of analysis and focuses on the implications of Ponzi finance for regulatory and supervisory policies. [more] Working Paper No. 574.4 |
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Working Papers | August 2009 Securitization, Deregulation, Economic Stability, and Financial Crisis, Part I This study analyzes the trends in the financial sector over the past 30 years, and argues that unsupervised financial innovations and lenient government regulation are at the root of the current financial crisis and recession. Combined with a long period of economic expansion during which default rates were stable and low, deregulation and unsupervised financial innovations generated incentives to make risky financial decisions. [more] Working Paper No. 573.1 |
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Working Papers | August 2009 Securitization, Deregulation, Economic Stability, and Financial Crisis, Part II This study analyzes the trends in the financial sector over the past 30 years, and argues that unsupervised financial innovations and lenient government regulation are at the root of the current financial crisis and recession. Combined with a long period of economic expansion during which default rates were stable and low, deregulation and unsupervised financial innovations generated incentives to make risky financial decisions. [more] Working Paper No. 573.2 |
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Working Papers | August 2009 The Unequal Burden of Poverty on Time Use This study uses the first time-use survey carried out in South Africa (2000) to examine women’s and men’s time use, with a focus on the impacts of income poverty. We empirically explore the determinants of time spent on different paid and unpaid work activities, including a variety of household and individual characteristics, using bivariate and multivariate Tobit estimations. [more] Working Paper No. 572 |
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Working Papers | August 2009 How Well Do Individuals Predict the Selling Prices of Their Homes? Self-reported home values are widely used as a measure of housing wealth by researchers; the accuracy of this measure, however, is an open empirical question, and requires some type of market assessment of the values reported. In this study, the authors examine the predictive power of self-reported housing wealth when estimating housing prices, utilizing the portion of the University of Michigan’s Health and Retirement Study covering 1992–2006. [more] Working Paper No. 571 |
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Working Papers | July 2009 From Unpaid to Paid Care Work: The Macroeconomic Implications of HIV and AIDS on Women's Time-tax Burdens This paper considers public employment guarantee programs in the context of South Africa as a means to address the nexus of poverty, unemployment, and unpaid work burdens—all factors exacerbated by HIV/AIDS. It further discusses the need for genderinformed public job creation in areas that mitigate the “time-tax” burdens of women, and examines a South African initiative to address social sector service delivery deficits within the government’s Expanded Public Works Programme. [more] Working Paper No. 570 |
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Working Papers | June 2009 Fiscal Policy and the Economics of Financial Balances This paper presents the main features of the macroeconomic model being used at The Levy Economics Institute of Bard College, which has proven to be a useful tool in tracking the current financial and economic crisis. We investigate the connections of the model to the “New Cambridge” approach, and discuss other recent approaches to the evolution of financial balances for all sectors of the economy. [more] Working Paper No. 569 |
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Working Papers | June 2009 Distributional Impact of the American Recovery and Reinvestment Act Over the last two decades, those at the bottom of the income scale have seen their incomes stagnate, while those at the top have seen theirs skyrocket; without intervention, the recession that began in December 2007 was likely to exacerbate this trend. Will the American Recovery and Reinvestment Act of 2009 (ARRA) be able to keep the situation from getting worse for those at the bottom of the income scale? Will ARRA reverse the upward trend in inequality that we’ve seen in the recent past? The authors of this new working paper employ a microsimulation of ARRA to address these questions. [more] Working Paper No. 568 |
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Working Papers | June 2009 Revisiting (and Connecting) Marglin-Bhaduri and Minsky Many heterodox strands of thought share both a concern with the study of different phases or growth regimes in the history of capitalism and the use of formal short-run models as an analytical tool. The authors of this new working paper suggest (1) that this strategy is potentially misleading, and (2) that the stock-flow consistent (SFC) approach, while providing a general framework that may facilitate dialogue among those currents, is particularly well suited to all those who think that macroeconomic models may illuminate historical quests. [more] Working Paper No. 567 |
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Working Papers | May 2009 Caste and Wealth Inequality in India In this paper, we conduct the novel exercise of analyzing the relationship between overall wealth inequality and caste divisions in India using nationally representative surveys on household wealth conducted during 1991–92 and 2002–03. According to our findings, the groups in India that are generally considered disadvantaged (known as Scheduled Castes or Scheduled Tribes) have, as one would expect, substantially lower wealth than the “forward” caste groups, while the Other Backward Classes and non-Hindus occupy positions in the middle. [more] Working Paper No. 566 |
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Working Papers | May 2009 Housing Inequality in the United States In recent years, as the homeownership rate in the United States reached its highest level in history, homeownership itself remained unevenly distributed, particularly along racial and ethnic lines. By using data from the 2000 Integrated Public Use Microdata Series (IPUMS) and 2006 American Community Survey (ACS) to study the trajectory into homeownership of black, Asian, white, and Latino households, this paper explores the various socioeconomic and demographic characteristics, as well as the distinct immigration experiences and spatial patterns that shape racial and ethnic inequality in homeownership. [more] Working Paper No. 565 |
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Working Papers | May 2009 New Consensus Macroeconomics: A Critical Appraisal This paper is concerned with the New Consensus Macroeconomics (NCM) in the case of an open economy. It outlines and explains briefly the main elements of and way of thinking about the macroeconomy from the standpoint of both its theoretical and its policy dimensions. [more] Working Paper No. 564 |
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Working Papers | May 2009 Whither New Consensus Macroeconomics? In the face of the dramatic economic events of recent months and the inability of academics and policymakers to prevent them, the New Consensus Macroeconomics (NCM) model has been the subject of several criticisms. This paper considers one of the main criticisms lodged against the NCM model, namely, the absence of any essential role for the government and fiscal policy. [more] Working Paper No. 563 |
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Working Papers | May 2009 The Current Economic and Financial Crisis: A Gender Perspective Widespread economic recessions and protracted financial crises have been documented as setting back gender equality and other development goals in the past. In the midst of the current global crisis—often referred to as “the Great Recession”—there is grave concern that progress made in poverty reduction and women’s equality will be reversed. [more] Working Paper No. 562 |
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Working Papers | May 2009 The Return of the State: The New Investment Paradigm To save America—indeed, the global economy as a whole—the private/public sector balance has to shift, and the neoliberal economic model on which the country has been based for the past 25 years has to be modified. In this new working paper, Marshall Auerback details why the role of the state needs to be reemphasized. [more] Working Paper No. 561 |
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Working Papers | April 2009 The Social and Economic Importance of Full Employment Unemployment was singled out by John Maynard Keynes as one of the principle faults of capitalism; the other is excessive inequality. Obviously, there is some link between these two faults: since most people living in capitalist economies must work for wages as a major source of their incomes, the inability to obtain a job means a lower income. [more] Working Paper No. 560 |
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Working Papers | April 2009 Labor-market Performance in the OECD In this paper we assess the evolution of labor-market performance in the Organisation for Economic Co-operation and Development (OECD) over the last decade. We provide a survey of the literature dealing with labor-market performance in the OECD, finding that, while this literature tends to conclude that institutions are a key part of the story, the survey’s results appear far less robust and uniform than is commonly believed. [more] Working Paper No. 559 |
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Working Papers | April 2009 Managing the Impact of Volatility in International Capital Markets in an Uncertain World International financial flows are the propagation mechanism for transmitting financial instability across borders; they are also the source of unsustainable external debt. Managing volatility thus requires institutions that promote domestic financial stability, ensure that domestic instability is contained, and guarantee that international institutions and rules of the game are not themselves a cause of volatility. [more] Working Paper No. 558 |
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Working Papers | March 2009 Background Considerations to a Regulation of the U.S. Financial System United States financial regulation has traditionally made functional and institutional regulation roughly equivalent. However, the gradual shift away from Glass-Steagall and the introduction of the Financial Modernization Act (FMA) generated a disorderly mix of functions and products across institutions, creating regulatory gaps that contributed to the recent crisis. [more] Working Paper No. 557 |
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Working Papers | January 2009 Long-Term Trends in the Levy Institute Measure of Economic Well-Being (LIMEW), United States, 1959–2004 The motivation to construct the LIMEW in lieu of relying on the official measures of well-being is to provide a more comprehensive measure of economic inequality that will also show the disparities among key demographic groups. The authors of this new working paper show that the LIMEW provides a perspective on disparities among population subgroups that differs from the official measures, as well as differing time trends. [more] Working Paper No. 556 |
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Working Papers | January 2009 Financial Stability: The Significance and Distinctiveness of Islamic Banking in Malaysia This paper explores the significance of Islamic banking in Malaysia for stability in the country’s economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation of financial intermediation; consequently, neither is capable of identifying destabilizing elements in the system. [more] Working Paper No. 555 |
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Working Papers | January 2009 Macroeconomic Imbalances in the United States and Their Impact on the International Financial System The argument put forward in this paper is twofold. First, the financial crisis of 2007–08 was made global by the current account deficit in the United States; and second, there is global dependence on the United States trade deficit as a means of maintaining liquidity in financial markets. [more] Working Paper No. 554 |
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Working Papers | December 2008 Insuring Against Private Capital Flows Following an analysis of the forces behind the “global capital flows paradox” observed in the era of advancing financial globalization, this paper sets out to investigate the opportunity costs of self-insurance through precautionary reserve holdings. We reject the idea of reserves as low-cost protection against the vagaries of global finance. [more] Working Paper No. 553 |
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Working Papers | December 2008 Hypothetical Integration in a Social Accounting Matrix and Fixed-price Multiplier Analysis This study proposes a simple modification to a Social Accounting Matrix (SAM) in order to analyze the multiplier effects of a new sector. A different input composition, or technology, of the sector makes a conventional analysis of final-demand injections on existing sectors invalid. [more] Working Paper No. 552 |
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Working Papers | December 2008 Small Is Beautiful This paper examines the relationship between farm size and yield per acre in Turkey using heretofore untapped data from a 2002 farm-level survey of 5,003 rural households. After controlling for village, household, and agroclimatic heterogeneity, a strong inverse relationship between farm size and yield is found to be prevalent in all regions of Turkey. [more] Working Paper No. 551 |
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Working Papers | November 2008 An Empirical Analysis of Gender Bias in Education Spending in Paraguay Gender affects household spending in two areas that have been widely studied in the literature. One strand documents that greater female bargaining power within households results in a variety of shifts in household production and consumption. [more] Working Paper No. 550 |
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Working Papers | November 2008 Excess Capital and Liquidity Management These notes present a new approach to corporate finance, one in which financing is not determined by prospective income streams but by financing opportunities, liquidity considerations, and prospective capital gains. This approach substantially modifies the traditional view of high interest rates as a discouragement to speculation; the Keynesian and Post-Keynesian theory of liquidity preference as the opportunity cost of investment; and the notion of the liquidity premium as a factor in determining the rate of interest on longer-term maturities. [more] Working Paper No. 549 |
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Working Papers | November 2008 On Democratizing Financial Turmoil The paper uses Minsky’s financial instability hypothesis as an analytical framework for understanding the subprime mortgage crisis and for introducing adequate reforms to restore economic stability. We argue that the subprime crisis has structural origins that extend far beyond the housing and financial markets. [more] Working Paper No. 548 |
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Working Papers | October 2008 Minsky and Economic Policy Recently, national newspapers all over the world have suggested that we should reread John Maynard Keynes, and that Hyman P. Minsky provides a valuable framework for understanding the world in which we live. [more] Working Paper No. 547 |
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Working Papers | October 2008 Do the Innovations in a Monetary VAR Have Finite Variances? Since Christopher Sims’s “Macroeconomics and Reality” (1980), macroeconomists have used structural VARs, or vector autoregressions, for policy analysis. Constructing the impulse-response functions and variance decompositions that are central to this literature requires factoring the variance-covariance matrix of innovations from the VAR. [more] Working Paper No. 546 |
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Working Papers | October 2008 Promoting Equality Through an Employment of Last Resort Policy Unemployment has far-reaching effects, all leading to an inequitable distribution of well-being. To put an economy on an equitable growth path, economic development must be based on social efficiency, equity—and job creation. [more] Working Paper No. 545 |
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Working Papers | September 2008 Inflation Targeting in Brazil The monetary policy regime of inflation targeting (IT) has been adopted by a significant number of emerging economies. While the focus of this paper is on Brazil, which began inflation targeting in 1999, the authors also examine the experience of other countries, both for comparative purposes and for evidence of the extent of this “new” economic policy’s success. [more] Working Paper No. 544 |
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Working Papers | September 2008 Macroeconomics Meets Hyman P. Minsky Expanding on an approach developed by financial economist Hyman Minsky, the authors present an alternative to the standard “efficient markets hypothesis”—the relevance of which Minsky vehemently denied. Minsky recognized that, in a modern capitalist economy with complex, expensive, and long-lived assets, the method used to finance asset positions is of critical importance, both for theory and for real-world outcomes—one reason his alternate approach has been embraced by Post Keynesian economists and Wall Street practitioners alike. [more] Working Paper No. 543 |
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Working Papers | August 2008 Keynes’s Approach to Full Employment This paper argues that John Maynard Keynes had a targeted (as contrasted with aggregate) demand approach to full employment. Modern policies, which aim to “close the demand gap,” are inconsistent with the Keynesian approach on both theoretical and methodological grounds. [more] Working Paper No. 542 |
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Working Papers | July 2008 The Unpaid Care Work–Paid Work Connection In order to provide a coherent perspective of gender differences in the world of work, the many intersections of paid and unpaid work must be brought to light. It is well documented that gender-based wage differentials and occupational segregation continue to characterize the division of labor among men and women in paid work; yet unpaid work in social reproduction, subsistence production, family businesses, and the community is often ignored. [more] Working Paper No. 541 |
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Working Papers | July 2008 The Effects of International Trade on Gender Inequality The process of economic globalization has winners and losers. Iran’s carpet industry provides a good illustration of the adverse side of this process. [more] Working Paper No. 540 |
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Working Papers | July 2008 The Return of Fiscal Policy The monetarist counterrevolution and the stagflation period of the 1970s were among the theoretical and practical developments that led to the rejection of fiscal policy as a useful tool for macroeconomic stabilization and full employment determination. Recent mainstream contributions, however, have begun to reassess fiscal policy and have called for its restitution in certain cases. [more] Working Paper No. 539 |
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Working Papers | July 2008 The Buffett Plan for Reducing the Trade Deficit This paper considers a plan proposed by Warren Buffett, whereby importers would be required to obtain certificates proportional to the amount of non-oil goods (and possibly also services) they brought into the country. These certificates would be granted to firms that exported goods, which could then sell certificates to importing firms on an organized market. [more] Working Paper No. 538 |
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Working Papers | July 2008 The Keynesian Roots of Stock-flow Consistent Macroeconomic Models This paper argues that institutionally rich stock-flow consistent models—that is, models in which economic agents are identified with the main social categories/institutional sectors of actual capitalist economies, the short period behavior of these agents is thoroughly described, and the “period by period” balance sheet dynamics implied by the latter is consistently modeled—are (1) perfectly compatible with John Maynard Keynes’s theoretical views, (2) the ideal tool for rigorous post-Keynesian analyses of the medium run, and (3) therefore crucial to the consolidation of the broad post-Keynesian research program. [more] Working Paper No. 537 |
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Working Papers | July 2008 Deficient Public Infrastructure and Private Costs This paper presents new evidence on the links between public-infrastructure provisioning and time allocation related to the water sector in India. An analysis of time-use data reveals that worsening public infrastructure affects market work, with evident gender differentials. [more] Working Paper No. 536 |
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Working Papers | May 2008 Statistical Matching Using Propensity Scores This paper summarizes the background, type, logic, and working procedure of the statistical matching used in the Levy Institute Measure of Economic Well-Being (LIMEW) project to combine the various data sets used to produce the synthetic data set with which the LIMEW is constructed. The authors use the match between the 2001 Survey of Consumer Finances and the Annual Demographic Survey of the Current Population Survey data sets to demonstrate the procedure and results of the matching. [more] Working Paper No. 535 |
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Working Papers | May 2008 Argentina: A Case Study on the Plan Jefes y Jefas de Hogar Desocupados, or the Employment Road to Economic Recovery After the 2001 crisis, Argentina—once the poster-child for pro-market structural-adjustment policies—had to define a new strategy in order to manage the societal demands that had led to the fall of the previous administration. The demand by the majority of the population for employment recovery spurred the government to introduce a massive employment program, the Plan Jefes y Jefas de Hogar Desocupados (Program for Unemployed Male and Female Heads of Households). [more] Working Paper No. 534 |
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Working Papers | April 2008 The Discrete Charm of the Washington Consensus Over the last two centuries in Latin America a Washington Consensus development strategy based on integration in the global trading system has dominated both domestic demand management and industrialization “from within.” This paper assesses the performance of each from the point of view of the impact of external conditions, and the validity of its underlying theory. [more] Working Paper No. 533 |
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Working Papers | April 2008 Old Wine in a New Bottle: Subprime Mortgage Crisis—Causes and Consequences This paper seeks to explain the causes and consequences of the United States subprime mortgage crisis, and how this crisis has led to a generalized credit crunch in other financial sectors that ultimately affects the real economy. It postulates that, despite the recent financial innovations, the financial strategies—leveraging and financial risk mismatching—that led to the present crisis are similar to those found in the United States savings-and-loan debacle of the late 1980s and in the Asian financial crisis of the late 1990s. [more] Working Paper No. 532 |
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Working Papers | April 2008 The International Monetary (Non-)Order and the “Global Capital Flows Paradox” This paper sets out to investigate the forces behind the so-called “global capital flows paradox” and related “dollar glut” observed in the era of advancing financial globalization. The supposed paradox is that the developing world has increasingly come to pursue policies that result in current account surpluses and thus net capital exports—destined primarily for the capital-rich United States. [more] Working Paper No. 531 |
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Working Papers | April 2008 Changes in the U.S. Financial System and the Subprime Crisis This paper traces the evolution of housing finance in the United States from the deregulation of the financial system in the 1970s to the breakdown of the savings and loan industry and the development of GSE (government-sponsored enterprise) securitization and the private financial system. The paper provides a background to the forces that have produced the present system of residential housing finance, the reasons for the current crisis in mortgage financing, and the impact of the crisis on the overall financial system. [more] Working Paper No. 530 |
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Working Papers | March 2008 Can Robbery and Other Theft Help Explain the Textbook Currency-demand Puzzle? This paper attempts to explain one version of an empirical puzzle noted by Mankiw (2003): a Baumol-Tobin inventory-theoretic money demand equation predicts that the average adult American should have held approximately $551.05 in currency and coin in 1995, while data show an average of $100. [more] Working Paper No. 529 |
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Working Papers | February 2008 Financial Flows and International Imbalances While the traditional approach to the adjustment of international imbalances assumes industrialized countries at a similar level of development and with similar production structures, such imbalances have historically been the result of a process of catching up by late-industrializing developing countries. This may call for an alternative approach that assesses how these imbalances can be managed in order to support developing countries’ efforts to achieve successful industrialization and integration into the global trade and financial system. [more] Working Paper No. 528 |
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Working Papers | January 2008 Financing Job Guarantee Schemes by Oil Revenue Iran’s constitution emphasizes social justice and obliges government to provide a job for every citizen. But in fact, the government’s duty to provide jobs has shifted to government support for a measure designed to create new employment opportunities through subsidized loans to the private sector. [more] Working Paper No. 527 |
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Working Papers | December 2007 American Jewish Opinion about the Future of the West Bank American Jewish opinion about the Arab-Israel conflict matters for both American and Israeli politics as well as for American Jewish life. This paper undertakes an analysis of that opinion based on American Jewish Committee (AJC) annual polls. [more] Working Paper No. 526 |
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Working Papers | December 2007 Financialization Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic systems at both the macro and micro levels. [more] Working Paper No. 525 |
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Working Papers | December 2007 Promotion Nationale Created in 1961, Promotion Nationale (PN) is an autonomous public entity in charge of mobilizing an underemployed or unemployed workforce for the implementation of labor-intensive projects, calling upon a simple technology likely to provide employment to unskilled workers. It is one of the major programs of social protection in Morocco—the oldest, most important, and best-targeted social program in the country. [more] Working Paper No. 524 |
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Working Papers | December 2007 The Natural Instability of Financial Markets This paper contrasts the economic incentives implicit in the Keynes-Minsky approach to inherent financial market instability with the incentives behind the traditional equilibrium approach leading to market stability to provide a framework for analyzing the stability induced by the recent changes in bank regulation to modernize financial services and the evolution of financial engineering innovations in the U.S. [more] Working Paper No. 523 |
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Working Papers | December 2007 Lessons from the Subprime Meltdown This paper uses Hyman P. Minsky’s approach to analyze the current international financial crisis, which was initiated by problems in the American real estate market. [more] Working Paper No. 522 |
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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 | November 2007 Public Employment and Women In 2002, Argentina implemented a large-scale public employment program to deal with the latest economic crisis and the ensuing massive unemployment and poverty. The program, known as Plan Jefes, offered part-time work for unemployed heads of households, and yet more than 70 percent of the people who turned up for work were women. [more] Working Paper No. 519 |
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Working Papers | October 2007 Fiscal Deficit, Capital Formation, and Crowding Out in India This paper analyzes the real (direct) and financial crowding out in India between 1970–71 and 2002–03. Using an asymmetric vector autoregressive (VAR) model, the paper finds no real crowding out between public and private investment; rather, complementarity is observed between the two. [more] Working Paper No. 518 |
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Working Papers | October 2007 What Are the Relative Macroeconomic Merits and Environmental Impacts of Direct Job Creation and Basic Income Guarantees? There is a body of literature that favors universal and unconditional public assurance policies over those that are targeted and means-tested. Two such proposals—the basic income proposal and job guarantees—are discussed here. [more] Working Paper No. 517 |
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Working Papers | September 2007 The Right to a Job, the Right Types of Projects There is now widespread recognition that in most countries, private-sector investment has not been able to absorb surplus labor. This is all the more the case for poor unskilled people. [more] Working Paper No. 516 |
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Working Papers | September 2007 Minsky’s Approach to Employment Policy and Poverty While Hyman P. Minsky is best known for his work on financial instability, he was also intimately involved in the postwar debates about fiscal policy and what would become the War on Poverty. [more] Working Paper No. 515 |
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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 | September 2007 Inequality of Life Chances and the Measurement of Social Immobility This paper begins by proposing two cardinal measures of inequality in life chances. Using as its database a matrix in which the lines correspond to the social category of parents and the columns to the income distribution of their children, it then highlights the importance of the marginal distributions when comparing social immobility within two populations. [more] Working Paper No. 513 |
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Working Papers | September 2007 Endogenous Money While the mainstream long argued that the central bank could use quantitative constraints as a means to controlling the private creation of money, most economists now recognize that the central bank can only set the overnight interest rate—which has only an indirect impact on the quantity of reserves and the quantity of privately created money. Indeed, in order to hit the overnight rate target, the central bank must accommodate the demand for reserves, draining the excess or supplying reserves when the system is short. [more] Working Paper No. 512 |
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Working Papers | August 2007 The Fed’s Real Reaction Function Using a VAR model of the American economy from 1984 to 2003, we find that, contrary to official claims, the Federal Reserve does not target inflation or react to “inflation signals.” Rather, the Fed reacts to the very “real” signal sent by unemployment, in a way that suggests that a baseless fear of full employment is a principal force behind monetary policy. [more] Working Paper No. 511 |
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Working Papers | August 2007 A Post-Keynesian View of Central Bank Independence, Policy Targets, and the Rules-versus-Discretion Debate This paper addresses three issues surrounding monetary policy formation: policy independence, choice of operating targets, and rules versus discretion. According to the New Monetary Consensus, the central bank needs policy independence to build credibility; the operating target is the overnight interbank lending rate, and the ultimate goal is price stability. [more] Working Paper No. 510 |
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Working Papers | August 2007 On Various Ways of Measuring Unemployment, with Applications to Switzerland This paper begins with an examination of various ways of measuring unemployment and, borrowing ideas from the poverty measurement literature, proposes four new general unemployment indices. The first of these is parallel to the Sen poverty index; the second, to the Sen index’s generalization by Shorrocks; the third, to the FGT poverty index; and the fourth, to the Watts poverty index. [more] Working Paper No. 509 |
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Working Papers | July 2007 The American Jewish Committee’s Annual Opinion Surveys The American Jewish Committee (AJC) surveys of Jewish opinion are unique both in being conducted annually and in the subject matter covered. This paper assesses the quality of these samples. [more] Working Paper No. 508 |
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Working Papers | July 2007 Who’s a Jew in an Era of High Intermarriage? The old ways in which surveys of Jews handled marginal cases no longer make sense, and the number of cases involved is no longer small. I examine in detail the public-use samples of the two recent national surveys of Americans of recent Jewish origin—the National Jewish Population Survey (NJPS) and the American Jewish Identity Survey (AJIS)—and also explore the implications for the American Jewish Committee annual surveys of Jewish political opinion. [more] Working Paper No. 507 |
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Working Papers | July 2007 The Effects of a Declining Housing Market on the U.S. Economy Longstanding speculation about the likelihood of a housing market collapse has given way in the past few months to consideration of just how far the housing market will fall, and how much damage the debacle will inflict on the economy. This paper assesses the magnitude of the impact of housing price decreases on real private expenditure, examines the role of new types of mortgages and mortgage-related securities, and analyzes possible policy responses. [more] Working Paper No. 506 |
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Working Papers | July 2007 Implementation of the National Rural Employment Guarantee Act in India Since its enactment in 2005, the National Rural Employment Guarantee Act (NREGA) has been implemented in 200 districts in India. Based on state-by-state employment demand-supply data and the use of funds released under NREGA, it is found that, although it is a demand-driven scheme, there are significant interstate differences in the supply of employment. [more] Working Paper No. 505 |
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Working Papers | July 2007 Female Land Rights, Crop Specialization, and Productivity in Paraguayan Agriculture Previous work has shown a pattern of lower household incomes for those Paraguayan farms with female landowners in the household. The study of agricultural production reveals that Paraguayan women specialize in livestock and dairy production, while men specialize in crop production. [more] Working Paper No. 504 |
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Working Papers | June 2007 A Simplified “Benchmark” Stock-flow Consistent (SFC) Post-Keynesian Growth Model Despite being arguably one of the most active areas of research in heterodox macroeconomics, the study of the dynamic properties of stock-flow consistent (SFC) growth models of financially sophisticated economies is still in its early stages. This paper attempts to offer a contribution to this line of research by presenting a simplified Post-Keynesian SFC growth model with well-defined dynamic properties, and using it to shed light on the merits and limitations of the current heterodox SFC literature. [more] Working Paper No. 503 |
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Working Papers | June 2007 Recent Trends in Household Wealth in the United States I find here that the early 2000s witnessed both exploding debt and the middle-class squeeze. While median wealth grew briskly in the late 1990s, it fell slightly between 2001 and 2004, while the inequality of net worth increased slightly. [more] Working Paper No. 502 |
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Working Papers | May 2007 Two National Surveys of American Jews, 2000–01 While there have been very few national surveys of American Jews, two that we do have are from the same period, 2000–01. They were conducted by different researchers using different sampling methods. [more] Working Paper No. 501 |
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Working Papers | May 2007 Economic Perspectives on Aging The aging of the American population will be a critical public policy issue in the years ahead. This paper surveys the recent literature on the economics of aging, with a special emphasis on government spending on the aged. [more] Working Paper No. 500 |
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Working Papers | May 2007 ELR-Led Economic Development This paper establishes the financial feasibility of an employer-of-last-resort (ELR) program in a small developing country like Tunisia. It argues that an ELR-led economic development policy is vastly superior to the traditional import substitution industrialization (ISI), export-led, and FDI-led development models, all of which Tunisia has adopted without much success in reducing unemployment. [more] Working Paper No. 499 |
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Working Papers | May 2007 Employment Guarantee Programs This working paper provides a survey of the theoretical underpinnings for the various employment guarantee schemes, and discusses full employment policy experiences in the United States, Sweden, India, Argentina, and France. The theoretical and policy developments are delineated in a historical context. [more] Working Paper No. 498 |
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Working Papers | May 2007 Surveying American Jews and Their Views on Middle East Politics This working paper takes up three related themes. In section 1, I briefly describe the issues relevant to surveying American Jews and highlight the importance of authoritative national surveys; in section 2, I note that these surveys have not included much exploration of American Jewish divisions over Israeli and American Middle East policy. [more] Working Paper No. 497 |
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Working Papers | May 2007 Gender Disparities in Employment and Aggregate Profitability in the United States We explore the relationships between aggregate profitability and women’s growing share of market work in the United States during the 1980s and 1990s. Using decomposition analysis and counterfactuals, we investigate whether the contribution of the declining wage share to the upswing in profitability was aided by the growing incorporation of women into the workforce. [more] Working Paper No. 496 |
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Working Papers | April 2007 Gender Inequalities in Allocating Time to Paid and Unpaid Work This working paper analyzes paid and unpaid work-time inequalities among Bolivian urban adults using time use data from a 2001 household survey. We identified a gender-based division of labor characterized not so much by who does what type of work but by how much work of each type they do. [more] Working Paper No. 495 |
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Working Papers | April 2007 Fiscal Policy in a Stock-flow Consistent (SFC) Model This paper deploys a simple stock-flow consistent (SFC) model in order to examine various contentions regarding fiscal and monetary policy. It follows from the model that if the fiscal stance is not set in the appropriate fashion—that is, at a well-defined level and growth rate—then full employment and low inflation will not be achieved in a sustainable way. [more] Working Paper No. 494 |
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Working Papers | March 2007 State, Difference, and Diversity Should the state treat men and women in identical ways, or should it legislate and enforce policies that are aware of gender differences? In other words, should the state be gender-blind or gender-sensitive? Gender, ethnic, religious, sexual orientation, ideological, economic, political, and cultural dimensions represent diversity among citizens. This paper argues that if the goal of the state is to promote democratic participation for all, a distinction must be drawn between socioeconomic characteristics that signify difference and those that manifest inequalities. [more] Working Paper No. 493 |
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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 | February 2007 Land Rental and Sales Markets in Paraguay This paper examines the claim that the land rental market can be an effective means of redistributing access to, if not ownership of, land to the rural poor, using Paraguay as our model. The land sales market is also examined. [more] Working Paper No. 491 |
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Working Papers | February 2007 Productivity, Technical Efficiency, and Farm Size in Paraguayan Agriculture This essay assesses the relationship between farm size and productivity. Both parametric and nonparametric methods are used to derive efficiency measures. [more] Working Paper No. 490 |
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Working Papers | January 2007 Fixed and Flexible Exchange Rates and Currency Sovereignty This paper provides an analysis of Keynes’s original “Bancor” proposal as well as more recent proposals for fixed exchange rates. We argue that these schemes fail to pay due attention to the importance of capital movements in today’s economy, and that they implicitly adopt an unsatisfactory notion of money as a mere medium of exchange. [more] Working Paper No. 489 |
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Working Papers | January 2007 Demand Constraints and Big Government In a series of articles and books, Harold Vatter and John Walker attempted to make the case that the American economy suffers from chronically insufficient demand that leads to growth below capacity. Of particular interest are a 1989 Journal of Post Keynesian Economics article that extends Domar’s work on the supply side effects of investment spending and a 1997 book that provides a comprehensive analysis of the evolution of the U. [more] Working Paper No. 488 |
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Working Papers | January 2007 Class Structure and Economic Inequality Existing empirical schemas of class structure do not specify the capitalist class in an adequate manner. We propose a schema in which the specification of capitalist households is based on wealth thresholds. [more] Working Paper No. 487 |
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