Archive
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Webinars and Events
Liberté, Égalité, Fragilité
PlenaryApr 8–11, 2015
The Institute for New Economic Thinking held its sixth Annual Conference from April 8 to April 11, 2015, in collaboration with the Organization for Economic Cooperation and Development (OECD) in Paris.
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Video
Caught in a Debt Trap
Apr 7, 2015
In his latest annual address at Cass Business School, Visiting Professor Lord Adair Turner warned that the world is caught in a ‘debt overhang’.
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Conference Session
Thomas Piketty & Joseph Stiglitz on Inequality
Apr 7 - May 7, 2015 | 02:30—06:30
Thomas Piketty and Joseph E. Stiglitz discuss the causes of, consequences of, and remedies for inequality.
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Article
Draghi’s Doom Loop(s): More than Just the Euthanasia of the Rentiers
Apr 7, 2015
The tail risks that may be generated by Mario Draghi’s monetary policy innovations in the Eurozone include even more intense versions of Andrew Haldane’s “Doom Loops”
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Working Paper
Working paperLarge Firm Dynamics and the Business Cycle
Apr 2015
Do large firm dynamics drive the business cycle? We answer this question by developing a quantitative theory of aggregate fluctuations caused by firm-level disturbances alone. We show that a standard heterogeneous firm dynamics setup already contains in it a theory of the business cycle, without appealing to aggregate shocks.
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Article
Tap... Tap... Tap... Is This Thing on?
Apr 5, 2015
Welcome to our website, and thus weblog, relaunch.
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Working Paper
Working Paper SeriesChange and Rationality in Macroeconomics and Finance Theory: A New Rational Expectations Hypothesis
Mar 2015
We call attention to the class of models that serve as the foundation for the rational expectations hypothesis (REH). Models in this class rule out completely any structural change that cannot be fully anticipated with a probabilistic or other quantitative rule. REH models are abstractions of rational decision-making, but only in a hypothetical world in which participants can fully anticipate when and how they might revise their understanding of the process driving outcomes.
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Partnership
Azim Premji University
Together with Azim Premji University (APU), we’re creating opportunities for advanced PHDs, leading academics and experts to focus on the urgent problems facing the world’s most populous democracy.
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Partnership
Cambridge-INET Institute
Supporting doctoral research through granting PhDs, appointing post-doctoral fellowships, hosting leading international economists, sponsoring major conferences and providing seed funding for cutting-edge research projects.
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Working Paper
Conference paperWhat is Real Wealth?
Mar 2015
A Ruskinian framework for economic justice.
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Partnership
Centre for International Governance Innovation (CIGI)
Since 2011, the Institute has partnered with the Centre for International Governance Innovation (CIGI) to change the way the field approaches the interplay between economics and governance, accelerating the development of new economic thinking.
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Working Paper
Working paperAn investigation into Multivariate Variance Ratio Statistics and their application to Stock Market Predictability
Mar 2015
We propose several multivariate variance ratio statistics. We derive the asymptotic distribution of the statistics and scalar functions thereof under the null hypothesis that returns are unpredictable after a constant mean adjustment (i.e., under the weak form Efficient Market Hypothesis). We do not impose the no leverage assumption of Lo and MacKinlay (1988) but our asymptotic standard errors are relatively simple and in particular do not require the selection of a bandwidth parameter. We extend the framework to allow for a time varying risk premium through common systematic factors.
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Article
Mission-Oriented Finance for Innovation: new ideas for investment-led growth
Mar 19, 2015
“The important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.” John M. Keynes, The End of Laissez Faire, 1926 (p. 44)
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Article
Sir John and Maynard Would Have Rejected the IS-LM Framework for Conducting Macroeconomic Analysis
Mar 19, 2015
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Working Paper
Working Paper SeriesHousehold Income, Demand, and Saving: Deriving Macro Data with Micro Data Concepts
Mar 2015
We develop adjustments to align the NIPA measures of key household flows with cash flow concepts that better reflect household budgets and demand.
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Article
The Coming China Crisis
Mar 18, 2015
Rapid private-debt growth threw Japan into crisis in 1991 and did the same to the United States and Europe in 2008. China may be next.
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Working Paper
Conference paperIncome Inequality and Growth: Problems with the Orthodox Approach
Mar 2015
This paper discusses the main issues about increasing inequality, whether it matters and its impact on economic activity and growth. It starts by briefly considering the empirical evidence of the share of income going to the top one percent since 1945 in the advanced countries. It then considers whether this represents an increase in the productivity of the top one percent or merely an extraction of economic rent.
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Partnership
Asia Global Institute
The Institute partners with the Asia Global Institute (AGI), an independent think tank in Hong Kong, to encourage global policy and actions to move toward a prosperous and sustainable future for the world.
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Partnership
Kiel Institute
Economic activity cannot be explained solely by modeling rational behavior. Our partnership with the Kiel Institute brings interdisciplinary scholars together to develop new perspectives on human motivation and decision-making.
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Partnership
The Institute for New Economic Thinking at USC-Dornsife
A jointly-created research institute devoted to finding a more realistic way of thinking about the economy, using tools from decision theory and the theory of networks to tackle problems such as unemployment and inequality.
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Partnership
The Institute for New Economic Thinking at the Oxford Martin School
Our partnership with the Oxford Martin School at the University of Oxford, is conducting visionary interdisciplinary research on a wide range of economic and public policy challenges.
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Video
Europe and the Challenge of Re-Starting Growth
Mar 13, 2015
How can we reconnect economic success to socioeconomic outcomes?
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Article
Get a TAN, Yanis: A Timely Alternative Financing Instrument for Greece
Mar 12, 2015
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Research Program
Human Capital and Economic Opportunity
The Human Capital and Economic Opportunity Global Working Group (HCEO) is an interdisciplinary collaboration incorporating biological, sociological and psychological perspectives into traditional economic questions of inequality and human capital.
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Research Program
Financial Stability
As the pace of financial crises quickens and the volatility of economic shocks intensifies, we need new ways to understand and respond to instability. This program coordinates our research efforts on finance, macroeconomics, and monetary economics.
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Research Program
Political Economy of Distribution
Inequality and distribution—areas underserved by mainstream economics—sit at the heart of The Institute’s work. This program brings together researchers from a variety of disciplines to develop alternative approaches to the problem of inequality.
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Article
New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals
Mar 10, 2015
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Article
Why Understanding Money Matters in Greece
Mar 6, 2015
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Video
Setting the Stage for the Next Financial Crisis
Mar 6, 2015
Michael Greenberger discusses the current state of play of regulatory reform and gives a barely passing grade.
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Article
Can Democracy Survive Aggressive Global Capitalism?
Mar 6, 2015
Rana Dasgupta shares his view of the contradictions and tensions of India’s economic and political scenes.
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Article
Drooping Green Shoots
Mar 5, 2015
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Video
Argentina vs the Vultures
Mar 3, 2015
Cecilia Nahon, Argentina’s Ambassador to Washington, DC., discusses the issues plaguing the Argentine government in it’s attempts to conclude debt restructuring.
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Article
Paul Krugman on the MIT History
Mar 2, 2015
My friend and “grown-up kid” Yann Giraud just called my attention to Paul Krugman’s recent column, “Empire of the Institute”, on Roy Weintraub’s recently edited HOPE volume “MIT and the Transformation of American Economics” (to which three Playground kids contributed: Yann, Beatrice Cherrier and myself).
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Article
How India’s Traumatic Capitalism is Reshaping the World
Mar 2, 2015
A British national of Bengali origin, novelist Rana Dasgupta recently turned to nonfiction to explore the explosive social and economic changes in Delhi starting in 1991, when India launched a series of profoundly transformative economic reforms.
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Video
Energy and the Economics of Renewables
Mar 1, 2015
Is moving away from coal and into shale - rather than directly into renewables - a worthy move from an economic as well as environmental point of view?
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Working Paper
Working paperNetworks in the Laboratory
Feb 2015
This chapter surveys experimental research on networks in economics.
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Working Paper
Conference paperPrecarious Condition: A Challenge For New Forms Of Struggle
Feb 2015
This text is part of a research project still in working progress that collects different contributions by the author and rewrite and reanalyse some reflections, already present, in a different form, in some publications:
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Working Paper
Conference paperShould heterodox economics be taught in economics departments, or is there any room for backwater economics?
Feb 2015
It is highly fitting to have a panel devoted to ‘teaching economics’ in Paris. No less than 15 years ago, in 2000, in downtown Paris, a group of students from the École Normale Supérieure, one of France’s élite schools, wrote a petition asking economics teaching to be devoted to the study of real-world problems, with an instrumental use of mathematics rather than to the description of imaginary worlds based on meaningless formalizations.
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Article
What does Yanis Varoufakis want?
Feb 26, 2015
With the approval of the reform proposals by the Greek government, the Eurozone has returned to calmer waters. But it is only a brief interlude.
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Working Paper
Conference paperRising Inequality, Demand, and Growth in the US Economy
Feb 2015
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Working Paper
Working paperSocial Structure, Markets and Inequality
Feb 2015
The interaction between social structure and markets remains a central theme in the social sciences. In some instances, markets can build on and enhance social networks’ economic role; in other contexts, markets appear to be in direct competition with social networks. The impact of markets on inequality and welfare is also varying: while markets can sometimes offer valuable outside options to marginalised individuals, in other situations only well connected and better off individuals can benefit from them.
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Working Paper
Working paperThe Labor Market Consequences of Electricity Adoption: Concrete Evidence from the Great Depression
Feb 2015
When the adoption of a new labor‐saving technology increases labor productivity, it is an open question whether the economy adjusts in the medium‐term by decreasing employment or increasing output. This paper studies the effects of cheaper electricity on the labor market during the Great Depression.
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Article
Finding Till Düppe
Feb 19, 2015
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Article
Statement on Banking and Banking Regulation to The Joint Committee of Inquiry into the Banking Crisis
Feb 17, 2015
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Article
The Wealthless Recovery
Feb 16, 2015
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Working Paper
Working paperContagion Risk and Network Design
Feb 2015
Individuals derive benefits from their connections, but these may, at the same time, transmit external threats. Individuals therefore invest in security to protect themselves. However, the incentives to invest in security depend on their network exposures. We study the problem of designing a network that provides the right individual incentives.
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Article
Why Don't Economists Go to Hollywood Parties?
Feb 15, 2015
Do economists live in a world of their own?
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Video
Emerging Markets and the Reregulation of Cross-Border Finance
Feb 13, 2015
Fresh from discussions at the UN regarding the Argentinian debt crisis, Institute grantee Kevin Gallagher tells us about his new book and how developing countries can look for opportunity amidst modern financial obstacles.
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Article
Reflexivity Between Micro and Macroeconomics
Feb 10, 2015
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Article
History of Policy Evaluation: A Few Questions
Feb 4, 2015
I need a history of policy evaluation.
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Article
What Thomas Piketty and Larry Summers Don’t Tell You About Income Inequality
Feb 4, 2015
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Working Paper
Working paperNetworks in Economics: A Perspective on the Literature
Feb 2015
It is instructive to view the study of networks in economics as a shift in paradigm, in the sense of Kuhn (1962). This perspective helps us locate the innovation that networks bring to economics, appreciate different strands of the research, assess the current state of the subject and identify the challenges.
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Article
The Brace is On
Feb 3, 2015
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Working Paper
Working Paper SeriesNew Evidence for the Present-Value Model of Stock Prices: Why the REH Version Failed Empirically
Feb 2015
Shiller (1981) and others have shown that the quantitative predictions of the REH present-value model are inconsistent with time-series data on stock prices and dividends. In this paper, we assess the empirical relevance of the model without explicitly representing how a rational market participant forecasts dividends and interest rates.
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Video
Forging Fresh Tools from the Past
Feb 1, 2015
John Smithin argues that we need to rethink the “consensus” with tools old and new.
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Working Paper
Working Paper SeriesLabor in the Twenty-First Century: The Top 0.1% and the Disappearing Middle-Class
Jan 2015
The ongoing explosion of the incomes of the richest households and the erosion of middle-class employment opportunities for most of the rest have become integrally related in the now-normal operation of the U.S. economy.
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Article
Yes indeed, we can blog it!
Jan 19, 2015
Last year I pointed out here (and here) that macroeconomists were making themselves comfortable in the blogosphere to discuss theoretical, methodological, and, why not, historical issues of their field (see also a nice post by our fellow kid, Beatrice).
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Article
Financial Deregulation: A Question of Efficiency or Distribution?
Jan 13, 2015
How can we better protect Main Street from the externalities of Wall Street?
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Article
Bernard Maris (1946-2015), Charlie Hebdo and Incommensurability
Jan 11, 2015
As you may remember, I had decided to cease contributing to this blog a few months ago. Nevertheless, I thought I could use my completely illegitimate administrator rights to post one last piece dealing with the recent events in France
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Article
Greece Shows the Limits of Austerity in the Eurozone. What Now?
Jan 9, 2015
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Article
Surprising New Findings Point to “Perfect Storm” Brewing in Your Financial Future
Jan 7, 2015
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Article
Behind Europe's Populist Backlash: The Hunger Games of Mainstream Economics
Jan 6, 2015
The turmoil of Brexit and the populist challenge across Europe are consequences of austerity policies that have brought misery to millions of ordinary voters. In this interview first published last January, Servaas Storm warned of the dangers of economic decision making divorced from democracy and from the social consequences of its prescriptions
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Video
Much Ado About Cyber Security
Jan 5, 2015
Private data is leaked more and more in our society. Wikileaks, Facebook, and identity theft are just three examples. Network defenses are constantly under attack from cyber criminals, organized hacktivists, and even disgruntled ex-employees.
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Video
China's Regulation Problem
Jan 4, 2015
Repression in China today is at its most severe point since the aftermath of 1989. David Wu discusses the tensions inherent in a one-party state which is struggling to aspire toward a more predictable rule of law.
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Grant
Years granted: 2015Collective and Cumulative Careers: Foundations for Sustainable Prosperity
This research project posits that increasing income concentration and erosion of the middle class are interrelated results of a change in the dominant corporate resource-allocation regime from “retain-and-reinvest” to “downsize-and-distribute,” manifested by massive distributions to shareholders and the disappearance of “collective and cumulative” careers.
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Grant
Years granted: 2015Central Banks, Crises, and Income Distribution
This research project studies the evolution of monetary policy since the financial crisis, as regards to changes in implementation mechanisms and use of conventional/unconventional instruments of monetary policy, as well as its mpact on macroeconomic variables, including income distribution.
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Grant
Years granted: 2015Distributional National Accounts
The objective of this proposal is to build distributional statistics of income and wealth consistent with national accounts aggregates for the United States.
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Grant
Years granted: 2015Copyrights and Creativity: Historical Evidence from Literature, Science, and Music
This research project improves our understanding of the effects of intellectual property rights—and in particular copyrights—on creativity and innovation.
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Grant
Years granted: 2015Financial Innovation and Central Banking in China: a Money View
This research project develops a “Money View” analysis of the recent evolution of China’s financial system.
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Grant
Years granted: 2015Managing Shadow Money
This research project explores the process of modern (shadow) money creation in hierarchical and interconnected monetary systems. In theorizing the dynamic instability of shadow money, it provides a comparative account of the structural and institutional specifics of shadow money in the US, Eurozone and China, and the policy challenges thereof.
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Grant
Years granted: 2015Inequality, Instability, and the Household Balance Sheet Channel
This research project studies the macroeconomic effects of rising inequality by focusing not on top incomes but instead on the economics of the “bottom 99%” which has been squeezed out by rising inequality and falling labor shares.
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Grant
Years granted: 2015The Epistemological and Statistical Limits of the Economic Sciences in Identifying Causalities
This research project explores the underlying limits—especially of the social and economic sciences—in identifying causalities including, among other aspects, the strong epistemological and statistical limitations of and assumptions behind the methods applied.
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Grant
Years granted: 2015Causal Analysis in Economics: Philosophical Underpinnings and Econometric Tools for Non-Standard Settings
This research project addresses the problem of inferring causal relationships in economics. It investigates the philosophical roots of the problem and develops econometric tools which take into account the complexity of economic systems.
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Grant
Years granted: 2015Archipelago Capitalism: Tax Havens, Eurodollars, and the Other International Political Economy, 1870s-1980s
This research project proposes to revise common interpretations of 20th-century economic history by unearthing the often overlooked story of tax havens and offshore finance, Eurodollars, and export processing zones between the 1870s and 1980s.
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Working Paper
Working Paper SeriesBeyond Market Failures The Market Creating and Shaping Roles of State Investment Banks
Jan 2015
Recent work has highlighted the need for innovation investments to be understood through a mission oriented approach rather than a market failure one (Foray et al. 2012). However, this work has only focused on state agencies, such as DARPA, overlooking the role of public financial institutions such as state investment banks.
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Grant
Years granted: 2013, 2014, 2015Identification and Modeling Risk Cascades with Dynamic Network Models
This research project models financial interdependencies in the form of dynamic networks and propose policy and risk measurement tools to pre-identify contagion.
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Grant
Years granted: 2013, 2014, 2015Digitally Tracking Technologies and Their Effects Across Time and Space
This research project uses information from digitized Google books and library catalogues to create new measures of technological innovation and diffusion for OECD countries from 1850 to the present.
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Grant
Years granted: 2014, 2015Innovation and the State: How Should Government Finance and Implement Innovation Policy?
This research project offers a historical taxonomy of organizational ways that governments fund and implement industrial and innovation policy as well as a taxonomy of contemporary implementation practices.
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Grant
Years granted: 2014, 2015Macroeconomic Policy over the Business Cycle
This research project provides guidance to policymakers for designing policies that are able to bring economies out of recessions by identifying the best policies to fight unemployment and stabilize the business cycle while alleviating inequality.
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Grant
Years granted: 2014, 2015The Birth of the Deutschmark: A social and financial history of German Currency Reform, 1945-1951
This research project provides a better understanding of the processes that accompanied the reforms of the Austrian schilling in 1947 and the birth of the deutschmark in 1948 by merging archival sources with financial data from banks and markets and comparing the two reforms.
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Grant
Years granted: 2014, 2015Safe Assets and the Evolution of Financial Information
This research project brings together ideas from the literature on robustness in macroeconomics, network theory, and evolutionary game theory to study the way in which perceptions of safe asset status evolve among financial market participants.
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Grant
Years granted: 2014, 2015Shadow Banks in China: Causes, Impacts and Policy Options
This research project explores the causes and consequences of the rise of China’s shadow banks based on the Modern Money Theory and its extension on the analysis on modern financial systems.
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Grant
Years granted: 2014, 2015Financially Constrained Arbitrage and Cross-Market Contagion
This research project develops a theoretical framework to examine the relation between arbitrage capital and the price properties of different asset markets.
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Grant
Years granted: 2014, 2015Institutional Investors and the Offshore Hedge Fund Industry: Investigating Patterns of Linkage, Organization, and Governance
This research project combines interdisciplinary expertise with a wholly unique database on hedge funds compiled by the Foundation for Fund Governance to examine the organization and governance of the offshore hedge fund industry.
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Grant
Years granted: 2014, 2015The Marginal Value of Cash and the Great Depression
This research project employs a new theory and innovative empirical analysis as a new lens for understanding financial instability and financial crises, focusing on the Great Depression.
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Grant
Years granted: 2014, 2015The Rise of Federal Credit Programs in the United States
This research project investigates the rise of federal credit programs in the United States, leading to a better understanding of the development of federal credit programs.
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Grant
Years granted: 2013, 2014, 2015The London and Cambridge Economic Service: New Perspectives on Economic Forecasting and the History of Economic Thought
This research project rescues the work of the London and Cambridge Economic Service, arguably the first body in Britain to collect and disseminate economic statistics.
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Grant
Years granted: 2013, 2014, 2015Growth and Credit: Mortgage Securitization through Landschaften in Prussia
This research project explores the origins of covered mortgage bonds and tests for the impact of financial development on economic growth by analyzing the Prussian Landschaften.
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Grant
Years granted: 2013, 2014, 2015Keynes(ians) and Hayek(ians) From the Great Depression to the Long Recession
This research project re-examines the debates around the time of the Great Depression and compares them with those before and since the start of the Long Recession in 2007/8, focusing on Keynes, Hayek, and their followers.
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Grant
Years granted: 2013, 2014, 2015Does Financialization Contribute to Growing Income Inequality?
This research project explores whether the financialization of the US economy has contributed to rising income inequality through complementary analyses at the individual, firm and industry levels.
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Grant
Years granted: 2013, 2014, 2015Cognitive Foundations of Economic Microfoundations
This research project formulates a normative theory of learning both preferences and probabilities that explains a broad spectrum of economic behavior heretofore judged irrational.
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Grant
Years granted: 2012, 2013, 2014, 2015Heterogeneous Expectations and Financial Crises (HExFiCs)
This research project develops a new behavioral paradigm of heterogeneous expectations that can help explain the sources of financial and macroeconomic instability and find possible policy remedies.
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Grant
Years granted: 2012, 2013, 2014, 2015Social Econometrics
This research project develops tools that allow social scientists to understand how and when social factors, such as peer influences, role models, or norms, affect individual choices.
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Grant
Years granted: 2012, 2013, 2014, 2015Financial Institutions: A Study of Real Linkages and Policy Influence
This research project studies how the Basel Committee on Banking Supervision and the International Swaps and Derivatives Association operate and the factors that help shape the extent to which they are able to ensure financial stability from a public-interest standpoint.
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Grant
Years granted: 2012, 2013, 2014, 2015Financial Globalization and Macroeconomic Policy
This research project establishes the conditions under which international capital flows are a force for stability, thereby improving the capacity for macroeconomic policy to avoid large boom-bust cycles.
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Grant
Years granted: 2012, 2013, 2014, 2015Capital Controls and the International Monetary System
This research project develops a rigorous new theoretical way to study controls of international capital flows and determine their optimal magnitude using a promising new empirical methodology.
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Grant
Years granted: 2012, 2013, 2014, 2015The Unpublished Writings of J.M. Keynes
This research project commences work on a supplementary edition covering much of John Maynard Keynes’s significant writings on economics, philosophy, and politics that remain unpublished.
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Grant
Years granted: 2015Economic Policy and the Performativity of Economic Models: Looking at the Intersection between Theory and Policy
This research project aims at analyzing the role of economic models in economic policy-making. Specifically, we investigate the impact of CGE models, related to the TTIP debate, and potential output models, related to fiscal policy in the EU, on politicial decision-making and public debate.
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Grant
Years granted: 2015Transport Infrastructure, Long-Run Development, and Policy: Evidence from England and Wales, c.1817 to 2011
This research project will study the long-run interactions between transport infrastructure and economic development using spatially-disaggregated data for England and Wales over the period c.1817—2011. It will look to inform policy toward large investments in physical infrastructures.
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Grant
Years granted: 2015German Energy Policy in the Age of Oil and Atoms, 1945–2000
This research project traces the history of German energy policy from 1945 to the present. It explores the political economy behind Germany’s transition from coal, to oil, to green energy, the crises driving these shifts, and the evolving efforts to balance affordability with security and environmental protection.