Inequality & Distribution

We are coming up to the fifth anniversary of the Lehman crash in September 2008. How bad was it? Have we fixed the problems?

Recent austerity policies have been guided by ideology rather than research. This column discusses research that reconciles disparate estimates of fiscal multipliers in the literature. It finds that common identification assumptions are problematic. Matching methods based on propensity scores show how contractionary austerity really is, especially in economies operating below potential.

A review of The Entrepreneurial State: Debunking Public vs. Private Sector Myths, the new book by Mariana Mazzucato

Between July 5th and 12th, the second annual summer school in development economics, jointly sponsored by Azim Premji University and the Institute for New Economic Thinking, was held in Bangalore, India.

To what extant do existing mainstream models properly address issues such as heterogeneity and interactions, which are considered central ingredients to understand economic crises as emergent, endogenous phenomena.

A minimum wage is a small minnow in an ocean of deficient aggregate demand

“Look! Up there in the sky! What is it? Is it a plane? Is it a bird?” No, it’s a distraction from the robbery that is taking place in broad daylight on the ground.

Only a few years ago, comparisons of American politics to opéra bouffe were not outrageously farfetched at least if you were not poor or sick.

Since the dawn of this millennium, and long before the current financial turmoil and the subsequent bitter pill of austerity therapy hit the Untied States and the European Union, the Chinese Communist Government has publicly recognized the monumental challenge of polarity.

There are a number of possible purposes in assessing the level of economic development of a country or part of a country. The assessment may provide an incentive for better development, particularly if it can be compared meaningfully with assessments for other countries.

The Institute for New Economic Thinking held its annual plenary conference in Hong Kong from April 4-7, 2013 at the InterContinental Hotel in Kowloon. The event discussed Asia’s emergence in the global economy and other core issues.

The relatively new field of inequality studies is gaining increasing momentum as economic disparity grows throughout the world, in advanced countries as well as less developed ones—especially in the United States.

The Azim Premji University-Institute for Economic Thinking Advanced Graduate Workshop in Poverty, Development and Globalization is interested in identifying the complex global interactions that influence poverty and development as well as the development strategies that have proven successful in promoting equitable growth, promoting capabilities, and reducing poverty.

This research project continues the work of the University of Texas Inequality Project, developing new data and research in several technical areas.

This research project analyzes the determinants of wage share, taking account of country-specific institutional aspects, in order to contribute to the theory of distribution, combining insights from political economy, institutional economics, and industrial relations.

This research project collects data that measures maternal knowledge about the impacts of investments on child development and estimates the role such knowledge plays in the determination of economic and social inequality.

This research project shows what economists can learn from political philosophers in thinking about economic inequality while also investigating the philosophical significance of recent empirical work on inequality, within economics and elsewhere.

What do you get when you put two of the most well known and most widely cited economists in the world, both Nobel laureates, on stage together? A healthy dose of economic reality.

The purpose of this Chartbook is to present a summary of evidence about changes in economic inequality – primarily income, earnings, and wealth – for 25 countries covering a 100 year period from 1911 to 2010.

Elephant seals have got too big for their beaches. A large specimen might weigh over 8000 lbs (3700 kg).Their size has a simple evolutionary explanation. Large males fight for the right to mate with a whole beach full of females. For elephant seals it is, quite literally, winner-takes-all. And the key to winning is simple – size.

We have grown accustomed to regulating financial markets based on imagined, not real markets. Real markets are shaped by and co-evolve with institutional arrangements within two fundamental constraints: Imperfect knowledge and the threat of illiquidity.

The financial sector can support growth but it can also cause crisis. The present crisis has exposedgaps in economists’ understanding of this dual potential.

Many feel that due to its size and scale the financial system has become a burden on society rather than a servant to it. What are the key elements of a productive financial sector?

“Natural rate theory” has dominated interpretations of economic trends and policy prescriptions over many decades. European-type welfare state institution were claimed to cause a compressed wage distribution that distorts otherwise well functioning labor markets.

Inequality has been growing and destabilizing confidence in many countries in recent years.

Three major crises are confronting the world. The first is the increasing and uneven burden of humans on the biosphere, and the observation that we have already surpassed the ‘safe operating space’ for humanity with respect to three planetary boundaries: climate change, the nitrogen cycle and biodiversity loss.

In the last few years the impact of income distribution on macroeconomic dynamics has received growing academic attention.

How can we distribute growth globally when the developed world needs growth to emerge from debt overhangs and inequality between nations is still quite formidable?

Long periods of unequal incomes spur borrowing from the rich, increasing the risk of major economic crises

Higher income inequality in developed countries is associated with higher domestic and foreign indebtedness

Does greater inequality produce more fragile economic dynamics? Does concentration of wealth and income make societies more prone to crisis? If so, why?

We analyze shareholders’ incentives to change the leverage of a firm that has already borrowed substantially. As a result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer.

Budget cuts can be dangerous. Inspired by the wrenching experience in Greece, increasing attention is now being paid to the fact that austerity may fail to reduce the government deficit if the economy declines in response, as is likely in a liquidity trap (Delong and Summers 2012).

When the very fabric of society is threatened by prolonged austerity or a financial sector collapse, a deliberate re-structuring of debt may be necessary to restore the hopes of renewed prosperity.

After an era of vigorous expansion a downturn can reveal a large stock of debt relative to the economy’s capacity to service it.

The Institute joined the Centre for International Governance Innovation, and the Mercator Research Institute on Global Commons and Climate Change in hosting its third-annual plenary conference in Berlin from April 12-15, 2012.

Inequality did not increase during the early stages of economic development in Japan and the East Asian Tigers. But in India and China it did. Why is that?

This research project enhances our understanding of how endowments and subsequent opportunities and shocks explain the evolution of individual and family well-being across generations.

This paper describes the broad evolution of inequality in the world economy over the past four decades, and provides a summary account of the relationship between inequality, economic development, political regimes and the functional distribution of income.

The Institute for New Economic Thinking convened many of the world’s most distinguished economists, academics and thought leaders at its inaugural Conference at King’s College, University of Cambridge.