Government & Politics
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The Institute at ASSA
DiscussionJan 2, 2016
Join us for a reception at the ASSA conference in San Francisco
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The Sneaky Way Austerity Got Sold to the Public Like Snake Oil
Dec 22, 2015
A budget approach cloaked in the aura of science and technical jargon became a tool of manipulation.
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The Scientific Limits of Understanding Complex Social Phenomena
Dec 17, 2015
Since Aristotle the question about the potential relationship between economic inequality and democratic changes has been studied and debated – but scientifically our ability as researchers to assess and understand how such complex social phenomena may be related is much more limited than recognised.
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Who Stole Ireland's Pot of Gold
Dec 15, 2015
Patrick Honohan, Governor of the Central Bank of Ireland, discusses the Irish banking crisis.
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Working Paper Series
A Theory of How and Why Central-Bank Culture Supports Predatory Risk-Taking at Megabanks
Dec 2015
This paper applies Schein’s model of organizational culture to financial firms and their prudential regulators.
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Connecting American Foreign Policy to Economic Policy
Dec 7, 2015
How might a reimagined American foreign policy both bolster the domestic economy and help build a 21st-century global economy that works for everyone?
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Will Spain Reject Austerity?
Nov 20, 2015
Spain’s future path for economic policy will soon be decided.
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Inclusive Growth: Making It Happen
Nov 20, 2015
Exploring inequality, gender, and the North-South divide.
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Externalities and Public Goods: Theory OR Society?
Nov 19, 2015
How much does the standard theory of externalities and public goods really say?
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Working Paper Series
The American Dual Economy: Race, Globalization, and the Politics of Exclusion
Nov 2015
I describe the American economy in the twenty-first century as a dual economy in the spirit of W. Arthur Lewis.
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Working Paper Series
Inequality, Debt Servicing, and the Sustainability of Steady State Growth
Nov 2015
We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance.
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Working Paper Series
Did Quantitative Easing Increase Income Inequality?
Oct 2015
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.
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Governance in Africa
Oct 29, 2015
A combination of leeway within the government and constitutional immunity during incumbency enables office holders to abuse their budget at will, which in turn creates a crisis of growth in Africa, relative to other parts of the world.
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Working Paper Series
When Credit Bites Back: Leverage, Business Cycles and Crises
Oct 2015
This paper studies the role of credit in the business cycle, with a focus on private credit overhang.
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Working Paper Series
The Cyclically Adjusted Budget: History and Exegesis of a Fateful Estimate
Oct 2015
This paper traces the evolution of the concept of the cyclically adjusted budget from the 1930s to the present.
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Institute Grantee Appointed Central Bank Governor
Oct 20, 2015
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.
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What Really Caused the Crisis & What to Do About It
Oct 14, 2015
Adair Turner discusses his new book, Between Debt and the Devil: Money, Credit, and Fixing Global Finance.
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Big Finance, Demystified
Oct 8, 2015
John Kay shares findings from his new book, Other People’s Money, and his insights on changing the financial sector.
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$1.90 Per Day: What Does it Say?
Oct 6, 2015
The World Bank’s global poverty estimates suffer from deep-seated problems arising from a single source, the lack of a standard for identifying who is poor and who is not that is consistent and meaningful.
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Is the Devil in the Details? Estimating Global Poverty
Oct 3, 2015
Economists’ assumptions, even about seemingly “small” matters, make an enormous difference to global poverty estimates but their impact often goes unnoticed, and the choices made have been badly justified. We must stop pretending that the World Bank’s “$1 per day” estimates are at all reliable.
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Working paper
Religious Riots and Electoral Politics in India
Sep 2015
The effect of ethnic violence on electoral results provides useful insights into voter behaviour and the incentives for political parties in democratic societies.
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Fiscal Austerity & Greece
Sep 24, 2015
Professor Richard Portes discusses the problems of Europe and then specifically drills down into Greece itself.
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Working Paper Series
Tracking Variation in Systemic Risk at US Banks During 1974-2013
Jul 2015
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.
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EU refuses to acknowledge mistakes made in Greek bailout
Jul 21, 2015
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.
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Tackling the Energy & Environmental Challenges of the 21st Century
Jul 19, 2015
How well do our assumptions about the global challenges of energy, environment and economic development fit the facts?
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Latest Institute Grants Announced
Jul 17, 2015
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.
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How Dated Theories & Underlying Research Misguide Policy
Jul 15, 2015
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.
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The Greek Revolt Against Bad Economics Threatens European Elites
Jul 9, 2015
A look behind the scenes of the Greek referendum and what could happen next.
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How German Economists Really Think
Jul 7, 2015
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.
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Grexit: The Staggering Cost Of Central Bank Dependence
Jul 5, 2015
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.
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Partnership Paper
Is There a Debt-threshold Effect on Output Growth?
Jul 2015
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.
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Fixing the Eurozone
Jul 1, 2015
Greece: reculer pour mieux sauter
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Working paper
Is There a Debt-threshold Effect on Output Growth?
Jun 2015
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.
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Europe’s Attack on Greek Democracy
Jun 30, 2015
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.
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It's Time to Get Radical on Inequality
Jun 25, 2015
America’s economic system has failed by not raising living standards for most.
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Why This Time Is Different for Ukraine
Jun 15, 2015
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?
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Fiscal implications of the ECB’s bond-buying program
Jun 14, 2015
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.
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How Elite Power Brokers Corrupt our Finances, Freedom, and Security
Jun 14, 2015
Janine Wedel charts the fast–evolving system of power and influence. Who is accountable? What are the remedies available to the average citizen?
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The Long Road Back Toward Ethical Banking Practices
May 20, 2015
How do we rebuild trust in financial services?
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Adair Turner on Debt
May 13, 2015
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.
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UK Election: A Tale Of Two Nations
May 11, 2015
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.
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Want to Take on Financial and Governmental Corruption? Hire Women.
May 5, 2015
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Finance & Society
ConferenceMay 5–6, 2015
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.
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Finance & Society
May 4, 2015 | 02:30—05:30
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Working Paper Series
An Economical Business-Cycle Model
Apr 2015
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
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Greece and the Eurozone
Apr 14, 2015
Yanis Varoufakis and Joseph Stiglitz discuss Greece’s financial challenges and the associated Eurozone politics in this exclusive conversation.
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The Eurozone Crisis: Fiscal Profligacy Or Capital Flows As Final Causes
Apr 10, 2015 | 06:30—08:00
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Ukraine & The Future of Europe
Apr 10, 2015 | 08:00—08:30
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Conference paper
How Money Drives US Congressional Elections: More Evidence
Apr 2015
“Because many interests come into play in the financing of an election campaign and then they ask you to pay back. So the election campaign should be independent from anyone who may finance it.” - Pope Francis
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Conference paper
Gordian knot: A panoramic perspective on stemming illicit financial flows from Africa
Apr 2015
Pushing this strand of research brings a certain feeling of trepidation. It comes from recognizing that by openly elaborating on how to catch or deter a criminal, you thereby confer an undue advantage on the criminal through forewarning.
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Conference paper
Towards a Sovereign Debt Restructuring Framework
Apr 2015
Initiatives to improve sovereign debt restructuring (“SDR”) began long before recent Argentine bond decisions but were redoubled in the aftermath of these rulings. At first glance, these cases identify problematic contract language that could be rectified by re-drafting critical boilerplate provisions such as the pari passu and collective action clauses (“CAC”).
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Conference paper
The Prince('s) Rules: Economic Theories and Political Struggle in Europe.
Apr 2015
The Cyclically Adjusted Budget (CAB) is the estimated size of the public budget at some previously defined level of output which may represent the ‘normal’ output or a policy target and that usually is considered to be unaffected by business fluctuations or cycles. Such an estimate is supposed to isolate the automatic movements of revenues and expenditures, given the current structure of tax and transfers, from discretionary fiscal interventions and indicate the “impact” and sustainability of fiscal action.
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Conference paper
Capital Flight from Africa and Development Inequality: Domestic and Global Dimensions
Apr 2015
Over the past decades African economies have exhibited two stunning paradoxes: growth acceleration coexisting with stubbornly high poverty rates; increasing capital flight along with widening development financing gaps. There has been no attempt to link the two in the literature.
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Conference paper
Goethe’s Faust and the socioeconomic roots of modern subjectivity
Apr 2015
The modern individual is the point of intersection of the processes of consumption and production. The subjective representation of these processes has been determined by two branches of the modern middle class, the bourgeoisie, which has privileged consumption, and the bureaucracy, which has privileged production.
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Political Institutions & Inequality
Apr 9, 2015 | 11:00—12:30
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The Problem of Capital Flight
Apr 9, 2015 | 11:30—01:00
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Conference paper
Two Paths to War: The Origins of the First World War versus the Dynamics of Contemporary Sino-American Confrontations
Apr 2015
During the past year, there have been numerous and somber reflections, rather like those during a traditional period of mourning, about the great and tragic events that occurred just 100 years ago – the beginning of the First World War. And in the course of these melancholy reflections about the past, there naturally have arisen anxious concerns about the future.
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Conference paper
How the Planned Perversion of Democracy generated accelerating inequalities
Apr 2015
What is at stake : Increasing doubt over the virtue of democracy. One cannot doubt the ubiquitous lack of confidence and hope in the so-called democratic institutions by a large majority of the people. The fundamental cause is the blatant contradiction between the principle of democracy, promoting the rule and thereby the welfare of the people, and the indomitable tendency of rising and unsustainable inequality in terms of income, standard of living and wealth.
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Northeast Asia: The Balkans of the 21st Century?
Apr 9, 2015 | 09:15—10:45
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Sovereign Debt Restructuring
Apr 9, 2015 | 10:00—11:30
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The New Politics of Central Banking
Apr 9, 2015 | 07:00—08:30
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Conference paper
Anarchic East Asia on an American Tether—and Cushion
Apr 2015
“Oh, the Chinese hate the Japanese and the Japanese hate the Chinese—to hate all but the right folks is an old established rule. The Koreans hate the Japanese and the Vietnamese hate the Chinese, and the North Koreans hate them all. Oh, the People hate the Communists and the Communists hate the People. The Nationalists hate the Communists and the Communists hate themselves. The Confucians hate the Buddhists and the Muslims hate them all. All of my folks hate all of your folks. But during National Brotherhood Week, be nice to people who are inferior to you. It’s only for a week, so have no fear—be grateful that it doesn’t last all year.”
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Learning from Karl Polanyi
Apr 9, 2015
The old political-economic thinking of Karl Polanyi was never properly absorbed into “mainstream” North Atlantic economics: recognizing that land, labor, and finance are not really “commodities” returns institutions and social processes to the center of economic analysis.
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Conference paper
Central banks and distribution
Apr 2015
Income and wealth inequality have been rising in the past three decades. Surprisingly, inequality has been largely ignored in the literature and practice of monetary policy. However, due to the crisis, this question has been gaining more attention.
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Central Banks & Distribution
Apr 8, 2015 | 10:00—10:30
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Conference paper
Financial Regulation That Might Have a Chance of Working
Apr 2015
Regulation of financial services has been an unmitigated policy disaster.
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Conference paper
Global Crises, Equalizing and Dis-equalizing Capitalist Regimes: The Case of 20th Century Asian Political Economy
Apr 2015
The logic of deep global capitalist crises needs to be incorporated centrally into an understanding of the changes in the within-country inequality levels. I present a theoretical framework that incorporates two levels of political economic processes. First,global capitalist crises lead to the creation of an institutional structure or a regime in the capitalist centers that influences inequality in these core countries and in the periphery. Second the class configuration in the non-core countries - a set of institutional arrangements that can be termed local political economy - also plays a key role in determining inequality outcomes.
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Conference paper
Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession
Apr 2015
The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of top incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent.
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Conference paper
Unpacking and Reorienting Executive Subcultures of Modern Finance
Apr 2015
Recent weeks have surfaced an intense exchange of top-level finger pointing, both between Congress and the leadership of the Federal Reserve System, between Fed officials and executives in the private sector and within the Fed between the Board of Governors and the New York Reserve Bank.
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Financial Regulation That Might Have a Chance of Working
Apr 8, 2015 | 10:45—11:15
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Politics by Other Means? Eurozone Institutions and National Sovereignty in the Bank Bailout Negotiations
Apr 8, 2015 | 06:15—06:45
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Analyzing Growth & Inequality in the 21st Century
Apr 8, 2015 | 06:45—07:15
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Working Paper Series
Have Large Scale Asset Purchases Increased Bank Profits?
Apr 2015
This paper empirically examines the effects of the Federal Reserve’s Large Scale Asset Purchases (LSAP) on bank profits.
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Economic Growth & Inequality across Time & Space: Where Has Growth Lead to Equality and Why?
Apr 8, 2015 | 06:00—06:30
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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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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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Conference paper
Income 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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Europe and the Challenge of Re-Starting Growth
Mar 13, 2015
How can we reconnect economic success to socioeconomic outcomes?
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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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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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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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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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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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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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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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The Brace is On
Feb 3, 2015
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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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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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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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Years granted:
2015
Collective 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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Years granted:
2015
Central 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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Years granted:
2015
Distributional 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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Years granted:
2015
Financial 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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Years granted:
2015
Causal 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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Working Paper Series
Beyond 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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Years granted:
2015
Economic 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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Years granted:
2015
Transport 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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Years granted:
2015
Income Distribution, Asset Prices, and Aggregate Demand Formation, 1850-2010: A Post-Keynesian Approach to Historical Macroeconomic Data
This research project uses macroeconomic data going back to the mid-19th century to analyze issues such as the relation between income distribution and economic growth; and how debt, asset prices, and growth moved together the last 160 years.
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Working paper
The New Economics of Religion
Dec 2014
The economics of religion is a relatively new field of research in economics. This survey serves two purposes – it is backward-looking in that it traces the historical and sociological origins of this field, and it is forward-looking in that it examines the insights and research themes that are offered by economists to investigate religion globally in the modern world.
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Demystifying Modern Monetary Theory
Dec 27, 2014
Bill Mitchell presents a coherent analysis of how money is created, how it functions in global exchange rate regimes, and how the mystification of the nature of money has constrained governments, and prevented states from acting in the public interest.