Archive
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Grant
Years granted: 2013, 2014Dynamic Contagion Mechanisms in Financial Networks
This research project develops a novel framework to capture both instantaneous and dynamic contagion mechanisms arising in financial networks when balance sheet linkages across entities exist.
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Grant
Years granted: 2012, 2013, 2014Correlations in Complex Heterogeneous Networks
This research project uses statistical physics and network analysis to understand and explain the contagion and panic effects associated with crises that are unexplained in standard economic models.
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Grant
Years granted: 2012, 2013, 2014A Network-Based Analysis of Financial Markets
This research project explores the sources of and remedies for financial instability as well as the relationship between traders’ choice of a price-setting mechanism and market structure and the relationship between market freezes and the amount of intermediation in the market.
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Grant
Years granted: 2012, 2013, 2014Free from What? Evolving Notions of 'Market Freedom' in the History and Contemporary Practice of US Antitrust Law and Economics
This research project investigates the reasons behind the US financial crisis by applying the tools of the history of economic thought to the postwar evolution of US antitrust law and economic
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Grant
Years granted: 2012, 2013, 2014Financing Innovation: An Application of a Keynes-Schumpeter-Minsky Synthesis
This research project integrates two research paradigms to understand the degree to which financial markets can be reformed in order to nurture value creation and :capital development” rather than value extraction and destruction.
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Grant
Years granted: 2012, 2013, 2014A Revolution in Economic Theory: The Economics of Sraffa
This research project contends that Piero Sraffa tried to develop an economic theory that could stand up as an alternative to the orthodox theory of value and provide a foundation for the Keynesian and post-Keynesian alternatives.
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Grant
Years granted: 2012, 2013, 2014The Long Run History of Economic Inequality: Income, Wealth and Financial Crisis
This research project establishes a long-run global picture of economic inequality as revealed by fiscal records and analyzes the long-run drivers of inequality as well as the distributional impact of banking crises.
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Grant
Years granted: 2012, 2013, 2014Just Growth? Social Equity and Metropolitan Economic Performance
This research project incorporates recent US data to update empirical analyses of regional growth and utilizes case study strategies of American regions to investigate the underlying causal mechanisms of inequality.
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Grant
Years granted: 2012, 2013, 2014The Southern Homestead Act and Black Economic Mobility
This research project follows freed slaves from when they first applied for their land under the Southern Homestead Act until 1900 to learn how access to free land influenced their economic progress.
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Grant
Years granted: 2012, 2013, 2014Distributional Impacts of Climate Policy: A Comprehensive Approach
This research project addresses a need for a more comprehensive estimation of the distributional impact of various policies attempting to limit carbon emissions in the United States.
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Grant
Years granted: 2012, 2013, 2014Replication in Empirical Economics
This research project replicates a large number of studies by teaching replication to students, with the results included in a wiki project about the replicability of research.
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Grant
Years granted: 2012, 2013, 2014Understanding Macroeconomic Fragility
This research project provides insights into how the lending market and resale market for asset-backed securities could have broken down during the 2008-2009 financial crisis, leading to a near-collapse of the banking sector and to a significant decline in real loan activity.
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Grant
Years granted: 2011, 2012, 2013, 2014Hierarchy, Identity, and Collective Action
This research project explores the interaction between group identities and decisions to engage in collective action to secure access to public goods, such as education.
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Grant
Years granted: 2011, 2012, 2013, 2014A Large Scale Network Analysis of Firm Trade Credit
This research project proposes a large-scale simulation of how distress and growth propagate through the real economy via a network of trade credit between firms.
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Grant
Years granted: 2011, 2012, 2013, 2014Creating A Global Systemic Risk Initiative
This research project aims to change the conventional wisdom about how global banks take and manage risks and generate ideas that are both innovative and useful to realistic thinking about policy.
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Grant
Years granted: 2011, 2012, 2013, 2014How Big Is Too Big? What Should Finance Do and How Much Should It Be Cut Down to Size?
This project studies a broad array of financial institutions to discover the impacts of financial regulations on functionally efficient finance, productivity growth, and income distribution.
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Grant
Years granted: 2011, 2012, 2013, 2014Understanding Finance's Potential for Growth and for Crisis
This research project builds on theory indicating that credit flows to the real sector have systematically different effects from financial flows to asset markets.
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Grant
Years granted: 2012, 2013, 2014Financial Contagion: Theory and Experiments
This research project studies contagion among financial institutions and the role of financial market regulation in weakening or strengthening the transmission of financial turmoil across institutions.
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Grant
Years granted: 2012, 2013, 2014Evolution of Beliefs, Volatility of Exchange Rates and Market Experiments
This research project develops a model of foreign exchange markets in which agents’ expectations are explicitly modeled and evolve over time and examines how these models perform in terms of capturing the behavior observed in the experiments with human subjects.
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Grant
Years granted: 2012, 2013, 2014Lifecycle Human Capital Investment, Borrowing Constraints, and Risk
This research project designs and evaluates new strategies that can address the issues of financing human capital investments by developing and estimating a unified framework.
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Grant
Years granted: 2012, 2013, 2014State-Contingent Environmental Policy
This research project proposes linking emission fees to actual temperatures, thereby helping to break the policy stalemate and reach agreement on an effective policy.
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Grant
Years granted: 2013, 2014The Political Economy of Structural Adjustment: IMF Conditionality, 1986-2011
This research project creates a systematic and publically available database of macroeconomic and structural conditions in all IMF loan agreements signed after 1987.
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Grant
Years granted: 2013, 2014Impatient Capital in High-Tech Industries
This research project analyzes the role of investment in the operation and performance of three broad high-technology sectors: communication technology, biopharmaceutical drugs and medical technologies, and wind power, solar power, electric vehicles, and the smart grid.
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Grant
Years granted: 2013, 2014Macroeconomic Instability and Microeconomic Financial Fragility: A Stock-Flow Consistent Approach with Heterogeneous Agents
This research project introduces heterogeneous microeconomic behavior into a demand-driven stock flow consistent model to study the links between microeconomic financial fragility and macroeconomic instability.
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Grant
Years granted: 2013, 2014Income Inequality, Household Debt, and Current Account Imbalances
This research project analyzes the country-specific effects of inequality within a stock-flow consistent macro model and within a DSGE model with heterogeneous and interacting households.
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Grant
Years granted: 2012, 2013, 2014The Emergence of a Finance Culture in American Households, 1983-2010
This research project seeks to understand the linkages between the changes in the financial economy and the behavior of households in the real economy.
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Grant
Years granted: 2012, 2013, 2014Economic and Political Determinants of Policy Responses to Crises
This research project organizes a systematic database of policies implemented in response to crises, focusing on fiscal and monetary measures, in order to identify policy action rather than simply looking at endogenous outcome variables.
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Grant
Years granted: 2011, 2012, 2013, 2014An International Network on Expectational Coordination
This research project addresses in depth the questions of the nature of economic uncertainty, with the aim of revisiting from a new perspective many of the questions that have been raised by the recent crisis both in finance and macroeconomics.
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Grant
Years granted: 2011, 2012, 2013, 2014New Tools in the Credit Network Modeling with Agents' Heterogeneity
This research project captures systemic risk of the credit market by combining information about the level of fragility of individual economic entities with the network structure of their mutual credit exposures.
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Grant
Years granted: 2011, 2012, 2013, 2014Spillovers to Slavery: The Long and Short Run Economic Impacts of Slavery in the USA
This research project constructs new measures of slavery as a state-sanctioned property rights institution and documents how slavery impacted economic development in US history.
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Grant
Years granted: 2011, 2012, 2013, 2014Economic Theories and Historical Consequences: Rethinking the Canon of Economics
This research project deepens the understanding of the history of economics as a discipline by making economic texts of historical importance available to students and scholars and by translating the important historical works of economics into English.
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Grant
Years granted: 2011, 2012, 2013, 2014The Divergence of England
This research project reinterprets the events causing the British Industrial Revolution by showing that the Glorious Revolution of 1688-1689 was significant in causing the divergence of political institutions which led to the divergence of economic institutions and policy.
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Grant
Years granted: 2014Analytical History of Federal Reserve Banking Supervision
This research project analyzes the history of the concentration of bank regulatory authority within the Federal Reserve and explores the public policy issues arising from that concentration.
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Grant
Years granted: 2014The Value of Political Connections in Fascist Italy — Stock Market Returns and Corporate Networks
This research project examines the value of political connections between corporate groups in Italy and the National Fascist Party (PNF) during the years of Mussolini’s rise to power (1921-1929).
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Grant
Years granted: 2014Reflexivity and the Theory of Economic Agents
This research project uses reflexivity thinking to develop a theory of reflexive economic agents whose behavior is central to both the theory of innovation and to the explanation of phenomena such as bubbles, cascades, and herding that are inconsistent with DSGE/rational expectations macroeconomics.
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Grant
Years granted: 2014Agents and Markets: The Representative Agent in Mid- vs. Late-Twentieth Century Economics
This research project focuses on the role of the representative agent in recent macroeconomics and general equilibrium theory, with a particular emphasis on how different the situation was in the economic theorizing of the first neoclassical synthesis during the 1950s.
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Article
Modeling a World of Imperfect Knowledge
Dec 21, 2013
Does it matter if the Rational Expectations Hypothesis is unrealistic?
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Working Paper
Conference paperIncome Distribution and the Current Account: A Sectoral Perspective
Dec 2013
We analyse the link between income distribution and the current account for the period 1972-2007. We find that rising (top-end) personal inequality leads to a decrease of the current account, ceteris paribus.
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Article
Solomonic Judgment vs. Sophists, Economists and Calculators [1] [2]
Dec 12, 2013
Given the choice, would you accept to live in a society where happiness and prosperity is guaranteed for all on the condition that one single person be kept permanently unhappy? Is the well-being of thousands of people “worth” the sacrifice and suffering of a single innocent child? Such is the dilemma to which the inhabitants of the utopian city of Omelas are confronted in Ursula Le Guin’s philosophical short-story “The Ones Who Walk Away from Omelas”. In her parable, most people are ultimately able to come to terms with the atrocity. The few citizens who cannot end up walking away from the city — nobody knows where they go and they are never heard from again.
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Video
Finance to Support Growth
Dec 12, 2013
What is most demoralizing to participants in the financial markets? Falling prices? Constant volatility? How about a vacuum of trust?
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Video
Time for a New Approach for Unemployment?
Dec 8, 2013
More than five years after the fall of Lehman Brothers we are still dealing with the problem of high unemployment, the worst kind of “waste” in economic theory. Is there a better approach?
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Article
Our Hansen Moment
Dec 5, 2013
The main goal of the macroeconomist is to understand the sources behind business cycles and the behavior of financial markets in the modern economy.
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Article
In which MIT decided to teach micro first so as to make economics more relevant
Dec 4, 2013
I’ve already blogged on how undergraduate education evolved at MIT in the postwar era here and here, but since Mike Konczal and Paul Krugman make the case that, to bring introductory economics closer to the real world, macro should be taught before micro as Samuelson did in the first 13 editions of his Economics textbook, it may be worth returning to it.
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Video
The Moral Limits of Markets
Dec 3, 2013
What happens when a market-based economy becomes a market-based society?
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Article
Mature history of economics
Dec 1, 2013
In the past decade, the volume of literature in the history of economics has been of 500 articles and just under 50 books a year. The graph below traces the count in two year intervals (articles left axis, books right axis). The absolute volume is stable but given the growth of economic literature in the period, stable might be rebranded as static.
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Working Paper
Grantee paperInequality, Financialization, and the Growth of Household Debt in the U.S., 1989-2007
Nov 2013
Household indebtedness in the United States grew dramatically during the decades leading up to the financial crisis.
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Video
Mazzucato and Kaletsky Debate U.K. Mortgage Plan on BBC
Nov 27, 2013
The Bank of England took the first step in putting the brakes on the surging property market as it scrapped the United Kingdom’s flagship initiative that encourages mortgage lending, introduced earlier this year by Treasury minster George Osborne.
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Article
[PART 1] U.S. Current Account Deficits and German Surpluses: The Role of Income Distribution in Global Imbalances
Nov 25, 2013
Germany’s economic policies are under attack from all sides.
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Article
In the thick of it (labels and research)
Nov 24, 2013
Historians like labels. X history. History of y. The labels carve out subjects, set boundaries in time and space, at times even suggest methodological commitments.
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Video
The Continuing Risk of Derivatives
Nov 19, 2013
Jan Kregel on the Continuing Risk of Derivatives
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Video
What Do Management Consultants Do?
Nov 18, 2013
Most of us probably think of management consultancy as a technocratic function, helping companies fix internal problems in order to become more productive. But Institute for New Economic Thinking grantee Kimberley Chong thinks about it in a different way, by viewing management consultancy through the lens of cultural anthropology.
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Article
Do social movements create new ideas?
Nov 12, 2013
The short answer is yes. For the long answer I will make you sit through seven paragraphs.
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Article
Institute for New Economic Thinking Launches Project to Reform Undergraduate Syllabus
Nov 10, 2013
In response to widespread discontent among students, employers, and university teachers, a project to create a new core curriculum for economics was launched at a seminar hosted by HM Treasury today. The CORE curriculum project, funded by the Institute for New Economic Thinking, convened the meeting, which was attended by academics, policymakers, business leaders, and students from around the world.
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News
Institute Grantee James K. Galbraith Wins 2014 Leontief Prize
Nov 10, 2013
Institute for New Economic Thinking grantee James K. Galbraith will be awarded the 2014 Leontief Prize.
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Article
Harry Dexter White and the History of Bretton Woods
Nov 9, 2013
Why does Benn Steil’s history of Bretton Woods distort the ideas of Harry Dexter White?
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Article
Too Much Debt: Adair Turner on the Dangers of Excessive Sector Leverage
Nov 7, 2013
Adair Lord Turner, former Chairman of Great Britain’s Financial Services Authority and current Senior Fellow at the Institute for New Economic Thinking, argued in a keynote address to the Federal Reserve Bank of Chicago on Thursday that central banks must be equipped in future to address the dangers of excessive private sector leverage, using both pre-emptive interest rate policy and macro-prudential policy tools.
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Article
[PART 2] U.S. Current Account Deficits and German Surpluses: The Role of Income Distribution in Global Imbalances
Nov 6, 2013
In our two papers, we analyze how changes in personal and functional (wages versus profits) income distribution interact to produce different macroeconomic outcomes in different countries. On the basis of a stock-flow consistent model calibrated for the United States, Germany, and China, simulations suggest that a substantial part of the increase in household debt and the decrease in the current account in the United States since the early 1980s can be explained by the interplay of rising (top-end) household income inequality and certain institutions (e.g. easy access to credit, privately financed education and health care systems).
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Article
Economic Policy Must Address Excessive Private Sector Leverage
Nov 6, 2013
Adair Lord Turner, former Chairman of Great Britain’s Financial Services Authority and current Senior Fellow at the Institute for New Economic Thinking, will argue in a keynote address to the Federal Reserve Bank of Chicago on Thursday that central banks must be equipped in future to address the dangers of excessive private sector leverage, using both pre-emptive interest rate policy and macro-prudential policy tools.
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Video
The Economics of Uncertainty
Nov 6, 2013
Studies in psychology, neuroscience, biology, and many of the social sciences have long illustrated that human beings react very different from what economics textbooks tell you to expect when they are operating under conditions of radical uncertainty.
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Working Paper
Grantee paperIncome Distribution and Current Account Imbalances
Oct 2013
We develop a three-country, stock-flow consistent macroeconomic model to study the effects of changes in both personal and functional income distribution on national current account balances.
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Video
What Math and Physics Can Do for New Economic Thinking
Oct 29, 2013
In this interview, Eric Weinstein explores many creative ways that physics and more sophisticated forms of math can be used to rescue economics from itself and restore its now tarnished reputation.
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Article
Finance and the Death of Trust
Oct 27, 2013
The destruction of trust is not an accident.
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Webinars and Events
Mathematics for New Economic Thinking
WorkshopOct 26–19, 2013
This workshop has the dual aim to expose mathematicians to new research problems in economics and economists to new techniques and developments in mathematics.
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Article
Cyprus Fiasco Could Undermine the Euro Zone
Oct 25, 2013
The rescue of Cyprus was a microcosm of how the nations of Europe have failed to work together to adequately address their ongoing financial crises.
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Article
We Can Do Better
Oct 24, 2013
In the aftermath of the 2008 financial crisis, distrust in the financial sector was widespread. Even after the mess appeared to be cleaned up, the uncertainty over whether the worst was over remained real.
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Article
Trust and Finance
Oct 24, 2013
Finance is built on trust. It is based on promises about tomorrow, often paper promises backed by nothing other than words on a page. When trust in those promises breaks down, so too does the financial system. That is the lesson of thousands of years of history.
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Video
What Causes Inequality? An Econophysics Approach
Oct 23, 2013
In standard economics, inequality in outcomes is typically attributed to inequality of inputs, for example, from differences in education. Yakovenko thinks about inequality in a different way by extending some ideas from statistical physics.
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Article
The World Needs Eurobonds Now More Than Ever
Oct 23, 2013
The United States government openly flirting with a default on its debt is, to the financial system, like a Pope wondering out loud about the existence of God.
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Article
America’s Debt-Ceiling Debacle
Oct 22, 2013
When Greece’s sovereign-debt crisis threatened the euro’s survival, U.S. officials called their European counterparts to express bewilderment at their inability to resolve the issue.
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Article
Human Capital and Economic Inequality
Oct 21, 2013
Inequalities in skills are fundamentally linked to economic and social inequalities.
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Article
Economic theory declassified?
Oct 19, 2013
So, most Nobel Prize exegetes went a long way, this week, toward explaining that asset pricing is not primarily born out of theoretical reflection but out of prize-deserving empirical work.
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Article
Sovereigns versus banks: Crises, causes and consequences
Oct 18, 2013
In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.
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Video
Bringing History to Economics
Oct 17, 2013
This episode features grantee D’Maris Coffman of the Centre for Financial History talking about her organization’s commitment to a New Financial History and what the fruits of their approach can tell us about modern debt crises and sustainable debt levels.
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Article
Reinhart and Rogoff Respond to Criticism
Oct 16, 2013
Advisory Board members Carmen Reinhart and Kenneth Rogoff today issued a response to recent criticism of their paper “Growth in a Time of Debt.”
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Video
Solving the Euro Zone Crisis
Oct 15, 2013
This episode features Pier Carlo Padoan, Chief Economist and Deputy Secretary-General of the OECD, talking about the euro zone crisis, Europe’s structural problems, and how uncertainty has damaged economic growth in Europe.
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Article
What You Can Do to Protect Yourself Against a Totally Unnecessary U.S. Government Default
Oct 14, 2013
If Congress and the White House fail to raise the debt ceiling this week and the United States defaults on its debt, what can we expect and how can we protect ourselves against these events?
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Article
The Political Economy of the Nobel Prize, 45th edition
Oct 12, 2013
This morning, when I woke up a few hours before the Nobel announcement, I felt seriously dissatisfied. I had meant to write a post on Thomson Reuters’s prediction that Card, Angrist and Krueger may win the Nobel for their work on empirical microeconomics.
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Article
What is Economic Success?
Oct 11, 2013
“You are now leaving the world as you know it.”
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Video
The Failure of the Euro
Oct 7, 2013
This episode features David Vines of Oxford University talking about the euro crisis. Can the monetary union survive the crisis?
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Article
Trade Deals Must Allow for Regulating Finance
Oct 2, 2013
World leaders who are gathering for the APEC summit next week had hoped to be signing the Trans-Pacific Partnership Agreement (TPP). The pact would bring together key Pacific-rim countries into a trading bloc that the United States hopes could counter China’s growing influence in the region.
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Video
Where Do Preferences Come From?
Oct 1, 2013
How does economic theory match up with reality?
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Article
Why Economics Needs Economic History
Sep 27, 2013
The current economic and financial crisis has given rise to a vigorous debate about the state of economics, and the training which graduate and undergraduates economics students are receiving. Importantly, among those arguing most strongly for a change in the way that young economists are trained are the ultimate employers of these students, in both the private and the public sector. Employers are increasingly complaining that young economists don’t understand how the financial system actually works, and are ill-prepared to think about appropriate policies at a time of crisis.
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Video
The Failure of Financial Regulation
Sep 24, 2013
Anat Admati, author of The Bankers’ New Clothes: Whats Wrong with Banking and What to Do about It, talks about how to fix our broken banking sector.
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Article
Five Years on from Lehman: The More Things Change, the More They Stay the Same
Sep 22, 2013
Sadly, it is questionable whether the economy has really improved.
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Video
Too Big to Fail and the State of Finance Today
Sep 21, 2013
What do we need to do to get the financial sector back on track?
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Article
A Model’s Crisis
Sep 21, 2013
Friedrich von Hayek described the economist’s task as demonstrating how little we really know about what we imagine we can design
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Article
Lehman Was Not Alone – Measuring System Risk in the 2008 Crisis
Sep 21, 2013
what would measures of systematic risk have indicated to Treasury Secretary Paulsen if they had been available at that time?
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Article
Bankers Will Be Let Off the Hook If We Don't Start to Take Ourselves Seriously
Sep 20, 2013
How can we contain institutional failure?
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Article
Current Account Rebalancing Since the Crisis
Sep 19, 2013
A look at the large role the trade deficit of the United States has played since the 1980s.
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Article
The End of 'Financialization'
Sep 18, 2013
The failure of Lehman Brothers on 15 September 2008 marked the beginning of the end of the world’s love affair with financialization.
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Article
Learning from Lehman: Lessons for Emerging Markets from the Financial Crisis
Sep 18, 2013
What can emerging economies learn from the financial meltdown in advanced economies?
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Article
The Lehman Crisis and the Unfinished Business of Financial Reform
Sep 18, 2013
With the collapse of Lehman Brothers in September 2008, a crisis in part driven by derivatives on subprime mortgages, a seemingly obscure sector of the financial market help fuel the worst economic crisis since the Great Depression.
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Article
The Lehman Crisis and the Unfinished Business of Financial Reform
Sep 18, 2013
what have we learned from the crisis and what should we have learned?
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Article
Simon Johnson: The Problem of Too Big to Fail Is Even Bigger Than Before 2008
Sep 17, 2013
Simon Johnson, Professor at MIT and former chief economist of the IMF, calls for much higher capital requirements for big banks.
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Article
Did Capitalism Fail? Looking Back Five Years After Lehman
Sep 17, 2013
How could reputable ratings agencies – and investment banks – misjudge things so badly?
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Article
The Failure of Free-Market Finance
Sep 16, 2013
Five years after the collapse of the U.S. investment bank Lehman Brothers, the world has still not addressed the fundamental cause of the subsequent financial crisis – an excess of debt. And that is why economic recovery has progressed much more slowly than anyone expected (in some countries, it has not come at all).
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Article
The Financial World Five Years after Lehman Brothers
Sep 16, 2013
What have we learned about the American political economy from the crisis and its aftermath?
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Article
Economic Analysis Isn’t Objective – It’s As Personal As It Gets
Sep 14, 2013
What happens when professionals lose touch with the people they’re supposed to serve?
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Article
Swimming against the Current: A Remembrance of Ronald Coase (1910-2013)
Sep 13, 2013
Ronald Coase, who passed away last week at age 102, spent his academic career swimming against the current.
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Article
Inequality – It’s Bad…And It’s About to Get Way Worse
Sep 12, 2013
What’s behind rapidly worsening inequality in the United States?