Levy Institute Publications

  • Can Redistribution Help Build a More Stable Economy?


    Strategic Analysis, April 2019 | April 2019 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza
    Although the ongoing recovery is about to become the longest in the history of the United States, it is also the weakest in postwar history, and as we enter the second quarter of 2019, many clouds have gathered.

    This Strategic Analysis considers the recent trajectory, the present state, and the future prospects of the US economy. The authors identify four main structural problems that explain how we arrived at the crisis of 2007–09 and why the recovery that has followed has been so weak—as well as why the prospect of a recession is increasingly likely.

    The US economy is in need of deep structural reforms that will deal with these problems. This report analyzes a pair of policies that begin to move in that direction, both involving an increase in the tax rate for high-income and high-net-worth households. Even if the primary justification for these policies is not economic, this report shows that if such an increase in taxes is accompanied by an equivalent increase in government outlays, the redistributive impact will have a positive macroeconomic effect while moving the US economy toward a more sustainable future.

  • Can Greece Grow Faster?


    Strategic Analysis, November 2018 | November 2018 | Dimitri B. Papadimitriou, Michalis Nikiforos, Gennaro Zezza
    The 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.

  • Public Service Employment: A Path to Full Employment


    Research Project Reports, April 2018 | April 2018 | L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, Stephanie A. Kelton
    Despite 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.

  • The Measurement of Time and Consumption Poverty in Ghana and Tanzania


    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 Poverty
    Time 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.

  • The Macroeconomic Effects of Student Debt Cancellation


    Research Project Report, February 2018 | February 2018 | Scott Fullwiler, Stephanie A. Kelton, Catherine Ruetschlin, Marshall Steinbaum
    Among 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.
     

  • Globalization, Nationalism, and Clearing Systems


    Public Policy Brief No. 147, 2019 | March 2019 | Jan Kregel
    As 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.

  • Stagnating Economic Well-Being and Unrelenting Inequality


    Public Policy Brief No. 146, 2018 | August 2018 | Ajit Zacharias, Thomas Masterson, Fernando Rios-Avila
    Post-2000 Trends in the United States
    Ajit 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.

  • Global Imbalances and the Trade War


    Policy Note 2019/2 | May 2019 | Jan Kregel
    Against the background of an ongoing trade dispute between the United States and China, Senior Scholar Jan Kregel analyzes the potential for achieving international adjustment without producing a negative impact on national and global growth. Once the structure of trade in the current international system is understood (with its global production chains and large imbalances financed by international borrowing and lending), it is clear that national strategies focused on tariff adjustment to reduce bilateral imbalances will not succeed. This understanding of the evolution of the structure of trade and international finance should also inform our view of how to design a new international financial system capable of dealing with increasingly large international trade imbalances.

  • A Proposal to Create a European Safe Asset


    Policy Note 2019/1 | April 2019 | Paolo Savona
    While a consensus has formed that the eurozone’s economic governance mechanisms must be reformed, and some progress has been made on this front, what has been agreed to so far falls short of what is needed to address the central imbalances caused by the eurozone setup, according to Paolo Savona.

    The key elements that are missing from the current package of reforms are interrelated: a common insurance scheme for bank deposits, the possible regulation of banks’ sovereign exposure, and the existence of a common safe asset. Savona outlines a proposal to increase the supply of safe assets provided by a common European issuer (the European Stability Mechanism) and explains how the plan could be made economically and politically satisfactory to all member states while facilitating progress on the deposit insurance and sovereign exposure issues.

  • The Limitations of the “Populism” Explanation


    One-Pager No. 59 | April 2019 | Joel Perlmann
    Some common accounts of “populism” and its causes risk leading us away from understanding what is happening today in parts of the democratic West, according to Senior Scholar Joel Perlmann. He cautions that economic insecurity may well be a common source of populism, but such insecurity is too prevalent and too diverse to be tied primarily to massive international economic shifts. Cross-national explanations are of limited utility; we need to look more closely at the intermingling of political, ethnic, and cultural themes operating in national contexts in order to better understand particular outbursts of popular discontent.
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  • A Citizenship Question on the US Census


    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.

  • When to Ease Off the Brakes (and Hopefully Prevent Recessions)


    Working Paper No. 929 | May 2019 | Harold M. Hastings, Tai Young-Taft, Thomas Wang
    Increases in the federal funds rate aimed at stabilizing the economy have inevitably been followed by recessions. Recently, peaks in the federal funds rate have occurred 6–16 months before the start of recessions; reductions in interest rates apparently occurred too late to prevent those recessions. Potential leading indicators include measures of labor productivity, labor utilization, and demand, all of which influence stock market conditions, the return to capital, and changes in the federal funds rate, among many others. We investigate the dynamics of the spread between the 10-year Treasury rate and the federal funds rate in order to better understand “when to ease off the (federal funds) brakes.”

  • Democratizing Money


    Working Paper No. 928 | May 2019 | Jan Kregel
    In the Western interpretation of democracy, governments exist in order to manage relations of property, with absence of property ownership leading to exclusion from participation in governance and, in many cases, absence of equal treatment before the law. Democratizing money will therefore ensure equal opportunity to the ownership of property, and thus full participation in the democratic governance of society, as well as equal access to the banking system, which finances the creation of capital via the creation of money. If the divergence between capital and labor—between rich and poor—is explained by the monopoly access of capitalists to finance, then reducing this divergence is crucially dependent on the democratization of money. Though the role of money and finance in determining inequality between capital and labor transcends any particular understanding of the process by which the creation of money leads to inequity, specific proposals for the democratization of money will depend on the explanation of how money comes into existence and how it supports capital accumulation.

  • Classical Economics Today: Essays in Honor of Alessandro Roncaglia


    Book Series, March 2018 | March 2018 | Jan Kregel
    Edited by Marcella Corsi, Jan Kregel, and Carlo D'Ippoliti
    Edited 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
  • America Classifies the Immigrants


    Book Series, April 2018 | April 2018 | Joel Perlmann
    From Ellis Island to the 2020 Census
    In 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
  • Summary Spring 2019


    Volume 28, No. 2 | April 2019 | Elizabeth Dunn, Michael Stephens
    This issue of the Summary features a public policy brief that considers the flaws in the eurozone’s settlement and payment system and a policy note that revisits the fall of Lehman Brothers ten years later.
     
    Working papers included in this issue discuss the construction of stock-flow-consistent models that consider the specific features of the economy they are built to examine; investigate the role of social institutions in investment decisions under capitalism; compare Hyman Minsky’s and Lauchlin Curry’s positions on monetary economics; explore the evolution of central bank profits as fiscal revenue; assess the scope, successes, and shortcomings of social programs in Mexico and Argentina; and evaluate the impact of gender budgeting on gender equality and fiscal spending in Asia Pacific countries.
     
    INSTITUTE RESEARCH
    Program: The State of the US and World Economies
    • GENNARO ZEZZA and FRANCESCO ZEZZA, On the Design of Empirical Stock-Flow-Consistent Models
     
    Program: Monetary Policy and Financial Structure
    • JAN KREGEL, Globalization, Nationalism, and Clearing Systems
    • JAN KREGEL, Preventing the Last Crisis: Minsky’s Forgotten Lessons Ten Years after Lehman
    • SUNANDA SEN, Investment Decisions under Uncertainty
    • IVÁN D. VELASQUEZ, Two Harvard Economists on Monetary Economics: Lauchlin Currie and Hyman Minsky on Financial Systems and Crises
    • JÖRG BIBOW, Unconventional Monetary Policies and Central Bank Profits: Seigniorage as Fiscal Revenue in the Aftermath of the Global Financial Crisis
     
    Program: Gender Equality and the Economy
    • MARTHA TEPEPA, Social Policy in Mexico and Argentina
     
    Program: Employment Policy and Labor Markets
    • LEKHA S. CHAKRABORTY, MARIAN INGRAMS, and YADAWENDRA SINGH, Macroeconomic Policy Effectiveness and Inequality: Efficacy of Gender Budgeting in Asia Pacific
     
    INSTITUTE NEWS
    • Levy Berlin
    • Minsky Conference
    • Minsky Summer Seminar
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    Author(s):
    Elizabeth Dunn Michael Stephens

Ford-Levy Institute Projects
 
Levy Institute Publications in Greek

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Levy Institute President Dimitri B. Papadimitriou Addresses Mexican Congress on National Development Banks as an Instrument of Growth


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