Levy Institute Publications
Strategic Analysis, November 2018 | November 2018 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro ZezzaThe Greek government has managed to exit the stability support program and achieve a higher-than-required primary surplus so as not to require further austerity measures to depress domestic demand. At the same time, the economy has started to recover, mainly due to the good performance of both exports of goods and tourism and modest increases in investment
In this report, we review recent developments in the determinants of aggregate demand and net exports, and provide estimates of two scenarios: one which assumes business as usual and the other an alternate scenario simulating the medium-term impact of an acceleration in investment.
We conclude with a discussion on the sustainability of Greek government debt, showing that it is crucial that the cost of borrowing remains below the nominal growth of national income.Download:Associated Program:Author(s):Related Topic(s):
Strategic Analysis, April 2018 | April 2018 | Michalis Nikiforos, Gennaro ZezzaThe US economy has been expanding continuously for almost nine years, making the current recovery the second longest in postwar history. However, the current recovery is also the slowest recovery of the postwar period.
This Strategic Analysis presents the medium-run prospects, challenges, and contradictions for the US economy using the Levy Institute’s stock-flow consistent macroeconometric model. By comparing a baseline projection for 2018–21 in which no budget or tax changes take place to three additional scenarios, the authors isolate the likely macroeconomic impacts of: (1) the recently passed tax bill; (2) a large-scale public infrastructure plan of the same “fiscal size” as the tax cuts; and (3) the spending increases entailed by the Bipartisan Budget Act and omnibus bill. Finally, Nikiforos and Zezza update their estimates of the likely outcome of a scenario in which there is a sharp drop in the stock market that induces another round of private-sector deleveraging.
Although in the near term the US economy could see an acceleration of its GDP growth rate due to the recently approved increase in federal spending and the new tax law, it is increasingly likely that the recovery will be derailed by a crisis that will originate in the financial sector.
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Research Project Reports, April 2018 | April 2018 | L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, Stephanie A. KeltonDespite reports of a healthy US labor market, millions of Americans remain unemployed and underemployed, or have simply given up looking for work. It is a problem that plagues our economy in good times and in bad—there are never enough jobs available for all who want to work. L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton examine the impact of a new “job guarantee” proposal that would seek to eliminate involuntary unemployment by directly creating jobs in the communities where they are needed.
The authors propose the creation of a Public Service Employment (PSE) program that would offer a job at a living wage to all who are ready and willing to work. Federally funded but with a decentralized administration, the PSE program would pay $15 per hour and offer a basic package of benefits. This report simulates the economic impact over a ten-year period of implementing the PSE program beginning in 2018Q1.
Unemployment, hidden and official, with all of its attendant social harms, is a policy choice. The results in this report lend more weight to the argument that it is a policy choice we need no longer tolerate. True full employment is both achievable and sustainable.Download:Associated Program:Author(s):Related Topic(s):
Research Project Reports, August 2018 | August 2018 | Ajit Zacharias, Thomas Masterson, Fernando Rios-Avila, Kijong Kim, Tamar Khitarishvili
The Levy Institute Measure of Time and Consumption PovertyTime constraints that stem from the overlapping domains of paid and unpaid work are of central concern to the debates surrounding the economic development of developing countries in general and countries of sub-Saharan Africa in particular. Time deficits due to household production are especially acute in these countries due to the poor state of social and physical infrastructure, which constrains the time allocation people can choose.
Standard measures of poverty fail to capture hardships caused by time deficits. This report applies a methodological approach that incorporates time deficits into the measurement of poverty, known as the Levy Institute Measure of Time and Consumption Poverty (LIMTCP), to the cases of Ghana and Tanzania. The LIMTCP explicitly recognizes the role of time constraints and, as such, has the potential to meaningfully inform the design of policies aimed at poverty reduction and improvement of individual and household well-being. The analysis of simulation exercises assessing the impact of paid employment provision on official and LIMTCP poverty rates has strong implications for policies aimed at poverty reduction, emphasizing the need to account for alleviating not only income but also time constraints. It also has strong gender relevance, as time poverty is more relevant for women due to their disproportionate burden of household responsibilities. Our study argues that policies aimed at improving women’s labor market outcomes can also succeed at improving their well-being only if time constraints are addressed.Download:Associated Program:Author(s):Related Topic(s):
Research Project Report, February 2018 | February 2018 | Scott Fullwiler, Stephanie A. Kelton, Catherine Ruetschlin, Marshall SteinbaumAmong the more ambitious policies that have been proposed to address the problem of escalating student loan debt are various forms of debt cancellation. In this report, Scott Fullwiler, Research Associate Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum examine the likely macroeconomic impacts of a one-time, federally funded cancellation of all outstanding student debt.
The report analyzes households’ mounting reliance on debt to finance higher education, including the distributive implications of student debt and debt cancellation; describes the financial mechanics required to carry out the cancellation of debt held by the Department of Education (which makes up the vast majority of student loans outstanding) as well as privately owned student debt; and uses two macroeconometric models to provide a plausible range for the likely impacts of student debt cancellation on key economic variables over a 10-year horizon.
The authors find that cancellation would have a meaningful stimulus effect, characterized by greater economic activity as measured by GDP and employment, with only moderate effects on the federal budget deficit, interest rates, and inflation (while state budgets improve). These results suggest that policies like student debt cancellation can be a viable part of a needed reorientation of US higher education policy.
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Public Policy Brief No. 147, 2019 | March 2019 | Jan KregelAs global market integration collides with growing demands for national political sovereignty, Senior Scholar Jan Kregel contrasts two diametrically opposed approaches to managing the tensions between international financial coordination and national autonomy. The first, a road not taken, is John Maynard Keynes’s proposal to reform the postwar international financial system. The second is the approach taken in the establishment of the eurozone and the development of its settlement and payment system. Analysis of Keynes’s clearing union proposal and its underlying theoretical approach highlights the flaws of the current eurozone setup.Download:Associated Program(s):Author(s):Related Topic(s):
Public Policy Brief No. 146, 2018 | August 2018 | Ajit Zacharias, Thomas Masterson, Fernando Rios-Avila
Post-2000 Trends in the United StatesAjit Zacharias, Thomas Masterson, and Fernando Rios-Avila update the Levy Institute Measure of Economic Well-Being (LIMEW) for US households for the period 2000–13. The LIMEW—which comprises base income, income from wealth, net government expenditures, and the value of household production—is aimed at achieving a more comprehensive understanding of trends in living standards. This policy brief analyzes developments during this period at all levels of the LIMEW distribution, with a particular focus on the significant role played by net government expenditures. The overall trend for 2000–13 was one of historic stagnation in the growth of economic well-being for US households, but an examination of the different components of the measure reveals significant shifts taking place behind this headline trend.
A companion document, the Supplemental Tables, features additional data referenced in the policy brief.
Details about the sources of data and methods used to construct the estimates in this policy brief are discussed in Levy Institute Working Paper No. 912.Download:Associated Program(s):Author(s):Related Topic(s):
Policy Note 2018/5 | November 2018 | Jan Kregel
Minsky’s Forgotten Lessons Ten Years after LehmanTen years after the fall of Lehman Brothers and the collapse of the US financial system, most commentaries remain overly focused on the proximate causes of the last crisis and the regulations put in place to prevent a repetition. According to Director of Research Jan Kregel, there is a broader set of lessons, which can be unearthed in the work of Distinguished Scholar Hyman Minsky, that needs to play a more central role in these debates on the 10th anniversary of the crisis.
This insight begins with Minsky's account of how crisis is inherent to capitalist finance. Such an account directs us to shore up those government institutions that can serve as bulwarks against the inherent instability of the financial system—institutions that can prevent that instability from turning into a prolonged crisis in the real economy.
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Policy Note 2018/4 | May 2018 | Thomas Masterson, Ajit Zacharias
Some Lessons from Ghana and TanzaniaIn this policy note, Thomas Masterson and Ajit Zacharias address the nexus between wage employment, consumption poverty, and time deficits in the context of Ghana and Tanzania. Based on a recently completed research project supported by the Hewlett Foundation, the authors apply the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) to estimate whether the jobs that are likely to be available to potential employment-seeking, working-age individuals in consumption-poor households—who are predominantly female in both countries—can serve as vehicles of “economic empowerment.” They investigate this question using two indicators of empowerment, asking (1) whether the individual would be able to move their household to at least a minimal level of consumption via the additional earnings from their new job and (2) whether the individual would be deprived of the time required to meet the minimal needs of care for themselves (personal care), their homes, and their dependents.Download:Associated Program(s):Author(s):Related Topic(s):
One-Pager No. 58 | November 2018 | Joel Perlmann
What's New?The Trump administration is facing a legal challenge to its efforts to add a citizenship question to the 2020 decennial census—a question that was first included in 1890, but has not been asked of the entire population since 1950. If the citizenship question was asked in the past, why not reinstate it? Senior Scholar Joel Perlmann explains how the characteristics of both immigration and the census itself have changed radically since 1890 and, as a result, how the inclusion of this question on the once-a-decade census would not only be redundant, but would threaten the integrity of the census count.Download:Associated Program:Author(s):Related Topic(s):
One-Pager No. 57 | September 2018 | Ajit Zacharias, Thomas Masterson, Fernando Rios-AvilaThe Levy Institute Measure of Economic Well-Being (LIMEW) was designed to provide a more comprehensive understanding of the changes affecting household living standards. Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila summarize their latest research on the trends in economic well-being for US households. They reveal historic stagnation in LIMEW growth over the 2000–13 period, as well as a major shift in the composition of well-being. The post-2000 period can be characterized as one of a growing dependence on the government to sustain living standards, with rising net government expenditures offsetting a sharp drop in base income.Download:Associated Program(s):Author(s):Related Topic(s):
Working Paper No. 924 | February 2019 | Michalis NikiforosThe paper builds on the concept of (shifting) involvements, originally proposed by Albert
Hirschman (2002 ). However, unlike Hirschman, the concept is framed in class terms. A model is presented where income distribution is determined by the involvement of the two classes, capitalists and workers. Higher involvement by capitalists and lower involvement by workers tends to increase the profit share and vice versa. In turn, shifts in involvements are induced by the potential effect of a change in distribution on economic activity and past levels of distribution. On the other hand, as the profit share increases, the economy tends to become more wage led. The dynamics of the resulting model are interesting. The more the two classes prioritize the increase of their income share over economic activity, the more possible it is that the economy is unstable. Under the stable configuration, the most likely outcome is Polanyian predator-prey cycles, which can explain some interesting historical episodes during the 20th century. Finally, the paper discusses the possibility of conflict and cooperation within each of the distribution-led regimes.Download:Associated Program:Author(s):Related Topic(s):
Working Paper No. 923 | February 2019 | Fernando J. Cardim de Carvalho
The New Deal and Postwar France ExperimentsBy the beginning of the 20th century, the possibility and efficacy of economic planning was believed to have been proven by totalitarian experiments in Germany, the Soviet Union, and, to a lesser degree, Fascist Italy; however, the possibilities and limitations of planning in capitalist democracies was unclear. The challenge in the United States in the 1930s and in postwar France was to find ways to make planning work under capitalism and democratic conditions, where private agents were free to not accept its directives.
This paper begins by examining the experience with planning during the first years of the New Deal in the United States, centered on the creation and operation of the National Recovery Administration (NRA) and the Agricultural Adjustment Administration (AAA), and continues with a discussion of the French experience with indicative planning in the aftermath of World War II. A digression follows, touching on the proximity between the matters treated in this paper and Keynes’s view that macroeconomic stabilization could require a measure of socialization of investments, following James Tobin’s hunch that French indicative planning, as well as some social democrat experiences in Northern Europe, could be playing precisely that role. The paper concludes by identifying the lessons one can draw from the two experiences.Download:Associated Program(s):Author(s):Related Topic(s):
Book Series, March 2018 | March 2018 | Jan Kregel
Edited by Marcella Corsi, Jan Kregel, and Carlo D'IppolitiEdited by Marcella Corsi, Sapienza University of Rome, Levy Institute Director of Research Jan Kregel, and Carlo D’Ippoliti, Sapienza University of Rome, this new collection of 16 essays is dedicated to Alessandro Roncaglia and deals with the themes that “have characterized his work or represent expressions of his personality, his interests and method," particularly his contributions to the interpretation of classical political economists as a means for informing present-day policy.
Published by: Anthem Press
Book Series, April 2018 | April 2018 | Joel Perlmann
From Ellis Island to the 2020 CensusIn America Classifies the Immigrants: From Ellis Island to the 2020 Census (Harvard University Press, 2018), Senior Scholar Joel Perlmann traces the evolution of thinking about “race” and “ethnic groups” in America. Beginning with the 1897 “List of Races and Peoples” through the proposed 2020 changes for the US Census, Perlmann examines the shifting ideas about racial and national differences that shape our social and legal policies.
Published by: Harvard University Press
Volume 28, No. 1 | January 2019 | Elizabeth Dunn, Michael StephensThis issue of the Summary features a strategic analysis for Greece, analyzing the sources of the current turnaround in growth and the prospects for increasing the pace of the recovery. A public policy brief in the Distribution of Income and Wealth program updates the Levy Institute Measure of Economic Well-Being (LIMEW) through 2013 to provide a comprehensive assessment of household living standards in the United States, while a research project in the same program applies the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) to Ghana and Tanzania to highlight the role of time constraints in an attempt to meaningfully inform poverty reduction strategies.
Working papers included in this issue consider the transition processes in the countries of the former Soviet Union; reflect on Germany’s dominant role in the European Union and its implications for the stability of the eurozone as a whole; explore what the euro’s German roots mean for the future of the European Monetary Union; investigate the drivers of long-term bond yields in Australia; assess the quality of statistical matches and enumerate the data sources for the LIMEW update; and examine employment trends since the Great Recession, with a focus on the narrowing of the employment–population ratio gap between black and white workers.
Program: The State of the US and World Economies
- DIMITRI B. PAPADIMITRIOU, MICHALIS NIKIFOROS, and GENNARO ZEZZA, Can Greece Grow Faster?
- LIUDMILA MALYSHAVA, External Instability in Transition: Applying Minsky’s Theory of Financial Fragility to International Markets
Program: Monetary Policy and Financial Structure
- IGNACIO RAMIREZ CISNEROS, German Economic Dominance within the Eurozone and Minsky’s Proposal for a Shared Burden between the Hegemon and Core Economic Powers
- JÖRG BIBOW, Twenty Years of the German Euro Are More than Enough
- TANWEER AKRAM and ANUPAM DAS, Australian Government Bonds’ Nominal Yields: An Empirical Analysis
Program: The Distribution of Income and Wealth
- AJIT ZACHARIAS, THOMAS MASTERSON, and FERNANDO RIOS-AVILA, Stagnating Economic Well-Being and Unrelenting Inequality: Post-2000 Trends in the United States
- AJIT ZACHARIAS, THOMAS MASTERSON, FERNANDO RIOS-AVILA, KIJONG KIM, and TAMAR KHITARISHVILI, The Measurement of Time and Consumption Poverty in Ghana and Tanzania: The Levy Institute Measure of Time and Consumption Poverty
- FERNANDO RIOS-AVILA, Quality of Match for Statistical Matches Using the American Time Use Survey 2013, the Survey of Consumer Finances 2013, and the Annual Social and Economic Supplement 2014
- AJIT ZACHARIAS, THOMAS MASTERSON, and FERNANDO RIOS-AVILA, The Sources and Methods Used in the Creation of the Levy Institute Measure of Economic Well-Being for the United States, 1959–2013
Program: Employment Policy and Labor Markets
- THOMAS MASTERSON, Black Employment Trends since the Great Recession
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