Finance

This research project creates a new database of international capital flows from the early 19th century, when London became the financial capital of the world, until 1931, when international capital markets collapsed.

This research project examines the role of political and social unrest by analyzing their effects on bond and stock markets over the period 1900-2000.

This research project investigates whether rising inequality has contributed to the macroeconomic imbalances that erupted in the present crisis, based on a Kaleckian macroeconomic model.

This research project focuses on the sustainability of economic growth and implications for distribution, employment, stability, and economic policy.

Some Fundamental Keynesian and Post-Keynesian Insights, with an Analysis of Possible Mechanisms to Achieve a Sustained Recovery

Patrick Honohan, Governor of the Central Bank of Ireland, discusses the Irish banking crisis.

‘Tis the season to celebrate gift giving. But for big banks Santa Claus comes all the time, in the form of handsomely wrapped subsidies and subtly packaged regulatory nuances worth more more gold than the wildest dreams of the Three Wise Men.

This paper applies Schein’s model of organizational culture to financial firms and their prudential regulators.

With the RMB in the SDR, careful progression in China could balance the international monetary system.

There is a deeper story to be told about the inclusion of the Renminbi.

How might a reimagined American foreign policy both bolster the domestic economy and help build a 21st-century global economy that works for everyone?

“Governments propose, markets dispose,” as Charles Kindleberger liked to say.

Lord Adair Turner visited the Oxford Martin Lecture Theatre on Tuesday 24 November for a well-attended INET Oxford event launching his latest book ‘Between Debt and the Devil: Money, Credit, and Fixing Global Finance’ (Princeton University Press).

This paper analyzes what assumptions on formation of expectations are consistent with Minsky’s Financial Instability Hypothesis (FIH) and its corollaries.

This paper analyses the financial assistance provided to Greece in the first two rescue packages granted by the Troika (European Union, European Central Bank and IMF).

A gap between theory and reality has haunted economists.

A radical solution to the current economic malaise.

We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance.

We develop a neo-Kaleckian growth model that emphasizes the importance of consumption behavior.

Sometimes a radical path is the most practical way out of a mess.

This paper sketches the outlines of the new international monetary system that has emerged in the aftermath of the global financial crisis.

The impact of the post-meltdown Federal Reserve policy of ultra-low interest rates and Quantitative Easing (QE) on income and wealth inequality has become an important policy and political issue.

This paper studies the role of credit in the business cycle, with a focus on private credit overhang.

This paper traces the evolution of the concept of the cyclically adjusted budget from the 1930s to the present.

Is an ancient financial taboo keeping us from prosperity? Adair Turner, author of a new book on global finance, explains.

The Institute extends its congratulations to Philip Lane, who has been named to succeed Patrick Honohan as the Irish central bank chief, and inherit his role on the council of the ECB.

This essay critically evaluates the benefits and costs of the dominant methodology in macroeconomics, the DSGE approach. Although the approach has led to great progress in some areas, it has also created biases and blind spots in the profession that hold back our understanding and our ability to govern the macroeconomy. There is great scope for progress in macroeconomics by judiciously pushing the boundaries of some of the methodological restrictions imposed by the DSGE approach.

Adair Turner talks about his new book, Between Debt & the Devil: Money, Credit, and Fixing Global Finance with Martin Wolf of the Financial Times in a free, public discussion.

Adair Turner discusses his new book, Between Debt and the Devil: Money, Credit, and Fixing Global Finance.

John Kay shares findings from his new book, Other People’s Money, and his insights on changing the financial sector.

Hot on the heels of the BIS, now comes the IMF Global Financial Stability report, “Corporate Leverage in Emerging Markets–A Concern?”. Yes, a concern, and just in time for the annual meeting in Peru next week.

US Military needs during the Cold War induced a mathematical modeling of rational allocation and control processes while simultaneously binding that rationality with computational reality. Modeling strategies to map the optimal to the operational ensued and eventually became a driving force in the development of macroeconomic dynamics.

The best-known China bear says the emperor is not yet naked, but getting there.

Join Columbia University Dean Merit E. Janow for a talk by Lord Adair Turner, Chairman, Institute for New Economic Thinking.

Professor Richard Portes discusses the problems of Europe and then specifically drills down into Greece itself.

As Greece heads to the polls, a look back at the crisis and what the future will bring.

Tania Singer on the key importance of understanding preferences and behavioral change.

A prolonged period of extremely low nominal interest rates has not resulted in high inflation. This has led to increased interest in the “Neo-Fisherian” proposition according to which low nominal interest rates may themselves cause inflation to be lower.

If anything, it points to a better managed global financial system and a more resilient Chinese economy.

Bursting Bubbles leave a mess – in the markets, throughout the real economy, in societies, in politics and with policymaking.

The financial crisis of 2008 was not a run of the mill recession.

This paper, an extension of the Presidential Address to the International Economic Association, evaluates alternative strands of macro-economics in terms of the three basic questions posed by deep downturns: What is the source of large perturbations? How can we explain the magnitude of volatility? How do we explain persistence?

The latest austerity deal is terrible for Greece and Europe.

And how do they relate to our democratic institutions and institutional social relations?

In the last couple of months, Greece has once again become the center of attention of politicians, academics, and the general public. The debate has, for a large part, focused on Greece’s fiscal deficit as if it were just a self-inflicted Greek problem. But is it?

This paper proposes a theoretically based and easy-to-implement way to measure the systemicrisk of financial institutions using publicly available accounting and stock market data.

Dubious transactions and flimsy accounting standards need scrutiny.

The unprecedented intervention by China’s authorities to backstop China’s stock market reveals widening policy tensions in China’s leaderships financial reform agenda.

The sharp and sudden plunge scared everyone. Can the Chinese government get control of the market?

The recent financial crisis has impressively illustrated the dangers of rapid credit growth in a painful way.

As I write this it would be appear that the Greek crisis is finally coming to an end. In this report I would like to discuss why the negotiations were so fraught and what an agreement actually means. In a nutshell, the EU sought to address matters with the same kinds of measures that had been tried in the past, while Greece argued that doing so would not make things any better—and would in fact make them far worse.

The Institute for New Economic Thinking has awarded $2 million in grants to fund 21 different projects as part of the latest round of its research grant program.

The financial crisis of 2008 was unforeseen to a significant extent. One reason is that the dominant academic theories influencing political decision makers ignore recent advances and instead rely largely on models and decision science dating back to the Second World War.

There is now a growing consensus among policymakers and academics that a key element to improve safeguards against financial instability is to strengthen the “macroprudential” orientation of regulatory and supervisory frameworks.

The Eurozone crisis has been wrongly interpreted as either a crisis of fiscal profligacy or of deteriorating unit-labour cost competitiveness (caused by rigid labour markets), or a combination of both.

The thunder from the Greek “No” vote in the referendum on Sunday, July 5 continues to roll around the world.

A survey on behalf of the Sueddeutsche Zeitung indicates that German economists are much more American in their thinking than is presumed – with a rising trend.

It is a shame that Greece was unable to manage its finances and is now slipping into chaos. But this outcome was inevitable and could not be permanently averted with loans from the international community.

It is time for Greece to make a daring leap and adopt its own currency, says Ifo President Hans-Werner Sinn. “The drachma should be introduced immediately as a virtual currency,” Sinn said in Munich.

The ECB has decided to maintain its current level of emergency liquidity to Greece (ECB 2015). By refusing to extend additional emergency liquidity, the ECB has decided that Greece must leave the Eurozone. This may be a legal necessity or a political judgement call, or both. Anyway, it raises a host of unpleasant questions about the treatment of a member country and about the independence of the central bank.

This paper studies the long-run impact of public debt expansion on economic growth and investigates whether the debt-growth relation varies with the level of indebtedness.

This paper studies the long-run impact of public debt expansion on economic growth and investigates whether the debt-growth relation varies with the level of indebtedness.

The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

According to Reuters, Eurozone officials attempted to suppress the publication of this report.

America’s economic system has failed by not raising living standards for most.

Good incentives are no substitute for good citizens.

The International Monetary Fund’s chief economist, Olivier Blanchard, recently asked a simple and important question: “How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?” But that raises two more questions: How much of an adjustment has Greece already made? And have its creditors given anything at all?

It doesn’t make sense to pay someone to rob you.

The Ukrainian government has committed to implement far-reaching reforms in exchange for the support it is getting from the international community, led by the International Monetary Fund (IMF). Understandably, given Ukraine’s disappointing transition history, there is widespread scepticism on whether the country will live up to its commitments. Three failed IMF programmes later, the fundamental question is: Is it different this time?

Non-mainstream economists are disputing neoclassical ideas about capital.

There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems.

The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB’s OMT bond-buying programme. This column argues that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into monetary base, and sovereign-default risk into inflation risk. The real question is: What is the non-inflationary limit to money-base expansion? This depends upon the economic situation and is much higher in the current liquidity-trap setting.

Janine Wedel charts the fast–evolving system of power and influence. Who is accountable? What are the remedies available to the average citizen?

The last 30 years has seen a massive rise in the importance of financial instruments in the American economy. But what has been the impact of this shift in corporate investment strategy?

Motivated by the long-standing debate on the pros and cons of competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country’s international competitiveness. We refocus the analysis on the implications of monetary stabilization for a country’s comparative advantage.

How do we rebuild trust in financial services?

The former chairman of Britain’s Financial Services Authority and author of the forthcoming book “Between Debt and the Devil” explains why private debt, not banks, deepened the financial crisis and continues to cause trouble today.

Yes, it is a tale of two nations, but in a much broader way than you think. Not just England and Scotland, but an equally salient parallel between Great Britain and Canada.

Remarks from Finance & Society May 6, 2015

Introductory remarks at the 2015 Finance & Society conference in Washington D.C.

In this session Anat Admati and Brooksley Born discuss their observations about financial regulation needed to make sure the financial system serves society.

Closing remarks at the 2015 Finance & Society conference in Washington D.C.

Senator Elizabeth Warren, Federal Reserve Chairman Janet Yellen, and IMF Managing Director Christine Lagarde joined a renowned group of globally influential women in discussing how the financial system can be re-imagined to truly benefit society.

As Greece descended into a financial maelstrom in the spring of 2010, a small group of staffers at the International Monetary Fund (IMF) held top-secret talks with officials from the German and French finance ministries to discuss the idea of restructuring Greece’s debt.

Gudrun Johnsen on Iceland, “womenomics”, and Finance & Society

It Could Fall On You.

A member of the Austrian Central Bank tells us his research on wealth and income inequality in Europe.

In recent decades, advanced economies have experienced low and stable inflation and long periods of liquidity trap. We construct an alternative business-cycle model capturing these two features by adding two assumptions to a money-in-the-utility-function model: the labor market is subject to matching frictions, and real wealth enters the utility function. These assumptions modify the two core equations of the standard New Keynesian model

Yanis Varoufakis and Joseph Stiglitz discuss Greece’s financial challenges and the associated Eurozone politics in this exclusive conversation.

The Institute for New Economic Thinking responds to an evident need for innovative approaches to understanding economic and financial processes.

At least the Labour Party has only promised to cut day-to-day spending, not public investment.

Here we are, some 7 years after the Great Financial Crisis, and not one senior banking executive has gone to jail.

This paper proposes a different interpretation of the Eurozone crisis, seeing as its “final” cause European policies which have forced private savings down too low.

In much of Europe, the social rights and social protections won in the first post-war decades, by labour movements in particular, have subsequently been seriously eroded, and are further threatened by neoliberal austerity.