• 26th Annual Hyman P. Minsky Conference Blithewood, April 18–19, 2017. Online registration now open  MORE >>
  • The Hyman P. Minsky Summer Seminar, 2017 Blithewood, June 10–16, 2017. Application deadline: March 1  MORE >>
  • Gender and Macroeconomics Workshop New York City, September 13–15, 2017  MORE >>
  • Master of Science in Economic Theory and Policy An innovative two-year program with a professional focus  MORE >>
  • 25th Annual Hyman P. Minsky Conference Audio and video proceedings are now online.  MORE >>
  • Levy Book Series: Why Minsky Matters By  L. Randall Wray  MORE >>
  • 24th Annual Hyman P. Minsky Conference Conference proceedings and audio available online  MORE >>
  • Athens Conference: Europe at the Crossroads Conference proceedings now available online  MORE >>

Levy Institute Publications

  • Greece: Getting Out of the Recession


    Strategic Analysis, September 2016 | October 2016 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza

    The Greek government has agreed to a new round of fiscal austerity measures consisting of a sharp increase in taxes on income and property and further reductions in pension and other welfare-related expenditures. Based on our model of the Greek economy, policies aimed at reducing the government deficit will cause a recession, unless other components of aggregate demand increase enough to more than offset the negative impact of fiscal austerity on output and employment.

    In this report we argue that the troika strategy of increasing net exports to restart the economy has failed, partly because of the low impact of falling wages on prices, partly because of the low trade elasticities with respect to prices, and partly because of other events that caused a sharp reduction in transport services, which used to be Greece’s largest export sector.

    A policy initiative to boost aggregate demand is urgently needed, now more than ever. We propose a fiscal policy alternative based on innovative financing mechanisms, which could trigger a boost in confidence that would encourage renewed private investment.

  • Destabilizing an Unstable Economy


    Strategic Analysis, March 2016 | March 2016 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza
    Our latest strategic analysis reveals that the US economy remains fragile because of three persistent structural issues: weak demand for US exports, fiscal conservatism, and a four-decade trend in rising income inequality. It also faces risks from stagnation in the economies of the United States’ trading partners, appreciation of the dollar, and a contraction in asset prices. The authors provide a baseline and three alternative medium-term scenarios using the Levy Institute’s stock-flow consistent macro model: a dollar appreciation and reduced growth in US trading partners scenario; a stock market correction scenario; and a third scenario combining scenarios 1 and 2. The baseline scenario shows that future growth will depend on an increase in private sector indebtedness, while the remaining scenarios underscore the linkages between a fragile US recovery and instability in the global economy. 

  • How Long Before Growth and Employment Are Restored in Greece?


    Strategic Analysis, January 2016 | January 2016 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza
    The Greek economy has not succeeded in restoring growth, nor has it managed to restore a climate of reduced uncertainty, which is crucial for stabilizing the business climate and promoting investment. On the contrary, the new round of austerity measures that has been agreed upon implies another year of recession in 2016.

    After reviewing some recent indicators for the Greek economy, we project the trajectory of key macroeconomic indicators over the next three years. Our model shows that a slow recovery can be expected beginning in 2017, at a pace that is well below what is needed to alleviate poverty and reduce unemployment. We then analyze the impact of a public investment program financed by European institutions, of a size that is feasible given the current political and economic conditions, and find that, while such a plan would help stimulate the economy, it would not be sufficient to speed up the recovery. Finally, we revise our earlier proposal for a fiscal stimulus financed through the emission of a complementary currency targeted to job creation. Our model shows that such a plan, calibrated in a way that avoids inflationary pressures, would be more effective—without disrupting the targets the government has agreed upon in terms of its primary surplus, and without reversing the improvement in the current account. 

  • Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap


    e-pamphlet, March 2016 | March 2016 | Jordan Brennan
    American Prosperity in Historical Perspective
    Jordan Brennan, of Unifor and the Canadian Centre for Policy Alternatives, examines the rise of income inequality and the deceleration of economic growth in the United States in this two-part analysis. The first section explores the consolidation of corporate power, through mergers and acquisitions, between 1895 and 2013, and finds that reduced competition, declines in fixed asset investment, and the rise of practices such as stock buybacks have shifted investment away from the real economy, leading to weak economic growth and rising income inequality. The second section of Brennan’s analysis examines the interplay of labor unions, inflation, and income inequality. The author observes that the decline of unions as a countervailing force to corporate power and anti-inflationary monetary policy have shifted income away from middle- and lower-income groups. Similarly, he observes that over the past century inflation has tended to redistribute income from capital to labor—from the upper to the lower income strata. In this context, he observes that anti-inflation policy is a use of state power to effect a regressive redistribution of income.  
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    Author(s):
    Jordan Brennan

  • Brazil Still in Troubled Waters


    Public Policy Brief No. 143, 2017 | February 2017 | Fernando J. Cardim de Carvalho

    Since inheriting the Brazilian presidency five months ago, the new Temer administration has successfully ratified a constitutional amendment imposing a radical, two-decades-long public spending freeze, purportedly aimed at sparking an increase in business confidence and investment. In this policy brief, Fernando Cardim de Carvalho explains why this fiscal strategy is based not only on a flawed conception of the drivers of private-sector confidence and investment but also on a mistaken view of the roots of the current Brazilian economic crisis. The hoped-for “expansionary fiscal consolidation” is not likely to be achieved.

  • Full Employment: Are We There Yet?


    Public Policy Brief No. 142, 2017 | February 2017 | Flavia Dantas, L. Randall Wray

    Flavia Dantas and L. Randall Wray argue that the emerging conventional wisdom—that the US economy has reached full employment—is flawed. The unemployment rate is not providing an accurate picture of the health of the labor market, and the common narrative attributing shrinking labor force engagement to aging demographics is overstated. Instead, falling prime-age participation rates are the symptom of a structural inadequacy of aggregate demand—a problem of insufficient job creation and stagnant incomes that conventional public policy remedies have been unable to address. The solution to our long-running secular stagnation requires targeted, direct job creation for those at the bottom of the income scale.

  • The Impact of Immigration on the Native-born Unemployed


    Policy Note 2016/3 | August 2016 | Fernando Rios-Avila, Gustavo Canavire-Bacarreza
    In this policy note, Research Scholar Fernando Rios-Avila and Gustavo Canavire-Bacarreza, Universidad EAFIT, observe that immigration in the United States has a small but statistically significant impact on the labor market behavior of native-born unemployed workers. Their chances of transitioning from unemployment to employment are not affected by the share of immigrants in their job markets, but the native-born unemployed are more likely to leave the labor force when living in areas with a higher relative concentration of immigrants. Three additional results of the study shed light on what might be contributing to this higher rate of labor market exit, with each pointing to the potential role of expectations in creating a discouraged worker effect among the native-born unemployed in high-immigration states. 

  • The Narrow Path for Brazil


    Policy Note 2016/2 | April 2016 | Fernando J. Cardim de Carvalho

    Brazil is mired in a joint economic and political crisis, and the way out is unclear. In 2015 the country experienced a steep contraction of output alongside elevated inflation, all while the fallout from a series of corruption scandals left the policymaking apparatus paralyzed. Looking ahead, implementing a policy strategy that has any hope of addressing the Brazilian economy’s multilayered problems would make serious demands on a political system that is most likely unable to bear it.

  • Falling Labor Force Participation


    One-Pager No. 53 | February 2017 | Flavia Dantas, L. Randall Wray
    Demographics or Lack of Jobs?

    Aging demographics, “social shifts,” and other supply-side and institutional factors have commonly been blamed for the fall in the US labor force participation rate. However, depressed labor force participation for prime-age workers is likely due to a combination of insufficient aggregate demand, weak job creation, and stagnant wages—all of which have been persistent problems over the past three or four decades. Although insufficient aggregate demand is the main problem, general “Keynesian” pump priming is not the answer. Stimulus needs to take the form of targeted job creation to tighten labor markets for less-skilled workers.

  • A Complementary Currency and Direct Job Creation Hold the Key to Greek Recovery


    One-Pager No. 52 | January 2016 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza

    Even under optimistic assumptions, the policy status quo being enforced in Greece cannot be relied upon to help recover lost incomes and employment within any reasonable time frame. And while a widely discussed public investment program funded by European institutions would help, a more innovative, better-targeted solution is required to address Greece’s protracted unemployment crisis: an “employer of last resort” (ELR) plan offering paid work in public projects, financed by issuing a nonconvertible “fiscal currency”—the Geuro.

  • Investing in Social Care Infrastructure and Employment Generation


    Working Paper No. 882 | January 2017 | Kijong Kim, İpek Ilkkaracan, Tolga Kaya
    A Distributional Analysis of the Care Economy in Turkey

    This paper examines the aggregate and gender employment impact of expanding the early childhood care and preschool education (ECCPE) sector in Turkey and compares it to the expansion of the construction sector. The authors’ methodology combines input-output analysis with a statistical microsimulation approach. Their findings suggest that the expansion of the ECCPE sector creates more jobs and does so in a more gender-equitable way than an expansion of the construction sector. In particular, it narrows the gender employment and earnings gaps, generates more decent jobs, and achieves greater short-run fiscal sustainability.

  • The Long-run Determinants of Indian Government Bond Yields


    Working Paper No. 881 | January 2017 | Tanweer Akram, Anupam Das

    This paper investigates the long-term determinants of Indian government bonds’ (IGB) nominal yields. It examines whether John Maynard Keynes’s supposition that short-term interest rates are the key driver of long-term government bond yields holds over the long-run horizon, after controlling for various key economic factors such as inflationary pressure and measures of economic activity. It also appraises whether the government finance variable—the ratio of government debt to nominal income—has an adverse effect on government bond yields over a long-run horizon. The models estimated here show that in India, short-term interest rates are the key driver of long-term government bond yields over the long run. However, the ratio of government debt and nominal income does not have any discernible adverse effect on yields over a long-run horizon. These findings will help policymakers in India (and elsewhere) to use information on the current trend in short-term interest rates, the federal fiscal balance, and other key macro variables to form their long-term outlook on IGB yields, and to understand the implications of the government’s fiscal stance on the government bond market.

  • Financial Regulation in the European Union


    Book Series, November 2015 | November 2015
    Edited by Rainer Kattel, Jan Kregel, and Mario Tonveronachi

    Have past and more recent regulatory changes contributed to increased financial stability in the European Union (EU), or have they improved the efficiency of individual banks and national financial systems within the EU? Edited by Rainer Kattel, Tallinn University of Technology, Director of Research Jan Kregel, and Mario Tonveronachi, University of Siena, this volume offers a comparative overview of how financial regulations have evolved in various European countries since the introduction of the single European market in 1986. The collection includes a number of country studies (France, Germany, Italy, Spain, Estonia, Hungary, Slovenia) that analyze the domestic financial regulatory structure at the beginning of the period, how the EU directives have been introduced into domestic legislation, and their impact on the financial structure of the economy. Other contributions examine regulatory changes in the UK and Nordic countries, and in postcrisis America.

    Published by: Routledge

  • Why Minsky Matters: An Introduction to the Work of a Maverick Economist


    Book Series, November 2015 | November 2015 | L. Randall Wray
    By L. Randall Wray

    Perhaps no economist was more vindicated by the global financial crisis than Hyman P. Minsky (1919–1996). Although a handful of economists raised alarms as early as 2000, Minsky’s warnings began a half century earlier, with writings that set out a compelling theory of financial instability. Yet even today he remains largely outside mainstream economics; few people have a good grasp of his writings, and fewer still understand their full importance. Why Minsky Matters makes the maverick economist’s critically valuable insights accessible to general readers for the first time. Author L. Randall Wray shows that by understanding Minsky we will not only see the next crisis coming but we might be able to act quickly enough to prevent it.

    As Wray explains, Minsky’s most important idea is that “stability is destabilizing”: to the degree that the economy achieves what looks to be robust and stable growth, it is setting up the conditions in which a crash becomes ever more likely. Before the financial crisis, mainstream economists pointed to much evidence that the economy was more stable, but their predictions were completely wrong because they disregarded Minsky’s insight. Wray also introduces Minsky’s significant work on money and banking, poverty and unemployment, and the evolution of capitalism, as well as his proposals for reforming the financial system and promoting economic stability.

    A much-needed introduction to an economist whose ideas are more relevant than ever, Why Minsky Matters is essential reading for anyone who wants to understand why economic crises are becoming more frequent and severe—and what we can do about it.

    Published by: Princeton

  • Summary Winter 2017


    Volume 26, No. 1 | January 2017 | Michael Stephens, Elizabeth Dunn

    This issue of the Summary opens with a strategic analysis for Greece. Using alternative policy scenarios, the authors demonstrate that cleaning up the government’s arrears accounts and boosting public investment would improve GDP growth, but that growth and employment would best be promoted through the implementation of a direct job creation program underwritten by an innovative financing mechanism.

    Also in this issue: a policy note examines US Current Population Survey data for 2001–13 to identify the impact of state-level immigration rates on the native-born unemployed; a related paper provides a more in-depth look at the data and methodology used in the study. Other papers evaluate the impact of rule-based fiscal controls on public investment at the state level in India; the impact of incorporating gender criteria into the fiscal devolution formula proposed by India’s 14th Finance Commission; alternatives for increasing the effectiveness of banking supervision, including the use of a global cap rule to break up large banks; and the effects of employment gains on household production in Ghana and Tanzania using the Levy Institute Measure of Time and Consumption Poverty.

    INSTITUTE RESEARCH

    Program: The State of the US and World Economies

    Strategic Analysis

    • DIMITRI B. PAPADIMITRIOU, MICHALIS NIKIFOROS, and GENNARO ZEZZA, Greece: Getting Out of the Recession
    • PINAKI CHAKRABORTY, Federalism, Fiscal Space, and Public Investment Spending: Do Fiscal Rules Impose Hard Budget Restraints?

    Program: Monetary Policy and Financial Structure

    • GIUSEPPE MASTROMATTEO and LORENZO ESPOSITO, Minsky at Basel: A Global Cap to Build an Effective Postcrisis Banking Supervision Framework

    Program: Distribution of Income and Wealth

    • FERNANDO RIOS-AVILA, Quality of Match for Statistical Matches Used in the Development of the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) for Ghana and Tanzania
    • THOMAS MASTERSON, KIJONG KIM, and FERNANDO RIOS-AVILA, Simulations of Employment for Individuals in LIMTCP Consumption-poor Households in Tanzania and Ghana, 2012

    Program: Immigration, Ethnicity, and Social Structure

    • FERNANDO RIOS-AVILA and GUSTAVO CANAVIRE-BACARREZA, The Impact of Immigration on the Native-born Unemployed
    • FERNANDO RIOS-AVILA and GUSTAVO CANAVIRE-BACARREZA, Unemployed, Now What? The Effect of Immigration on Unemployed Transitions of Native-born Workers in the United States

    Program: Economic Policy for the 21st Century

    • ABHISHEK ANAND and LEKHA S. CHAKRABORTY, Engendering Intergovernmental Transfers: Is There a Case for Gender-sensitive Horizontal Fiscal Equalization?

    INSTITUTE NEWS

    Upcoming Events

    • 26th Annual Hyman P. Minsky Conference
    • The Hyman P. Minsky Summer Seminar

    Call for Papers

    • Gender and Macroeconomics Workshop
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    Author(s):
    Michael Stephens Elizabeth Dunn

Ford-Levy Institute Projects
 
Levy Institute Publications in Greek

From the Press Room

Greece's Economy Minister Confident of Reaching Deal with Creditors

Greece's Economy Minister Confident of Reaching Deal with Creditors

Minister Dimitri B. Papadimitriou expects agreement to be reached at February 20 Eurogroup meeting.
Minsky's Moment

Minsky's Moment

The second in a series of articles on seminal economic ideas looks at Hyman Minsky’s hypothesis that booms sow the seeds of busts.
<b>Keep Unemployment from Mushrooming with Preventative Policies</b>

Keep Unemployment from Mushrooming with Preventative Policies

Research Associate Pavlina R. Tcherneva on establishing a voluntary federal jobs program for the unemployed.
Greece Is Committed to Staying in Euro Zone: Antonopoulos

Greece Is Committed to Staying in Euro Zone: Antonopoulos

Levy economist and Syriza MP Rania Antonopoulos is interviewed ahead of Brussels Group talks.
<strong>Greek Debt: Do the Right Thing</strong>

Greek Debt: Do the Right Thing

Adjusting the terms of Greece's debt repayment is an ethical imperative, says Levy President Dimitri B. Papadimitriou.