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on Post Keynesian Economics |
| By: | Gennaro Zezza |
| Abstract: | This paper presents the main features of the macroeconomic model being used at The Levy Economics Institute of Bard College, which has proven to be a useful tool in tracking the current financial and economic crisis. We investigate the connections of the model to the "New Cambridge" approach, and discuss other recent approaches to the evolution of financial balances for all sectors of the economy. We will finally show the effects of fiscal policy in the model, and its implications for the proposed fiscal stimulus on the U.S. economy. We show that the New Cambridge hypothesis, which claimed that the private sector financial balance would be stable relative to income in the short run, does not hold for the short term in our model, but it does hold for the medium/long term. This implies that the major impact of the fiscal stimulus in the long run will be on the external imbalance, unless other measures are taken. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_569&r=pke |
| By: | Ajit Zacharias; Thomas Masterson; Kijong Kim |
| Abstract: | In this Special Report, Levy scholars Ajit Zacharias, Thomas Masterson, and Kijong Kim provide a preliminary assessment of the 2009 American Recovery and Reinvestment Act (ARRA), a package of transfers and tax cuts that is expected to provide relief to low-income and vulnerable households especially hurt by the economic crisis, while at the same time supporting aggregate demand. By the administration's estimate, ARRA will create or save approximately three and a half million jobs by the end of 2010; while the ameliorating impact of the stimulus plan on the employment situation is surely welcome, say the authors, the government could have achieved far more at the same cost by skewing the stimulus package toward outlays rather than tax cuts. Their analysis points toward the necessity for a comprehensive employment strategy that goes well beyond ARRA. The need for public provisioning of various sorts--ranging from early childhood education centers to public health facilities to the “greening” of public transportation--coupled with the severe underutilization of labor, naturally suggests an expanded role for public employment as a desirable ingredient in any alternative strategy. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:sr_06-12-09&r=pke |
| By: | Ajit Zacharias; Thomas Masterson; Kijong Kim |
| Abstract: | Over the last two decades, those at the bottom of the income scale have seen their incomes stagnate, while those at the top have seen theirs skyrocket; without intervention, the recession that began in December 2007 was likely to exacerbate this trend. Will the American Recovery and Reinvestment Act of 2009 (ARRA) be able to keep the situation from getting worse for those at the bottom of the income scale? Will ARRA reverse the upward trend in inequality that we've seen in the recent past? The authors of this new working paper employ a microsimulation of ARRA to address these questions. They find that, despite a large amount of job creation, ARRA is likely to have little impact on overall income inequality, or on the income gaps between relatively advantaged and disadvantaged groups. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_568&r=pke |
| By: | Tatom, John |
| Abstract: | The personal saving rate spiked up to an unusually high level in 2008 and spring 2009, prompting many observers to suggest that the financial crisis has created a new thrift ethic, reversing decades of decline in U.S. saving to near zero. The depth of the recent financial and economic crisis has prompted many to believe that there has been a sea change in attitudes toward regulation, independence and personal responsibility and that a permanent rise in saving behavior has taken place. There are many reasons for personal saving to have surged recently, however, and most of them are very temporary, especially the Obama tax cut, so it is not likely that the personal saving rate will persist at a higher level. Betting on fundamental changes in behavior is a risky, dare we say foolish, business in the absence of more fundamental change in the economic environment or incentives. |
| Keywords: | Saving; Financial crisis; Personal saving rate |
| JEL: | E62 E21 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16139&r=pke |
| By: | Tatom, John |
| Abstract: | esident Obama has released a sweeping plan to respond to the financial crisis and to insure that it is not repeated by altering and expanding the federal regulatory framework for financial services firms. The plan outlines detailed and demanding reporting deadlines for various existing federal regulatory institutions to formulate plans for the changes and asks Congress for action on the plan by the end of this year. One of the main components of the plan is to create a new federal agency, the Consumer Financial Protection Agency (CFPA), to protect consumers and investors from deceptive or dangerous products. This is one of the four broad components of comprehensive regulatory reform proposed by the President and the one that has received the greatest endorsement from congressional leaders in terms of the urgency of action. Not surprisingly, the financial services industry has responded, arguing that a new regulator for consumer protection is not necessary and that it contradicts one of the principal goals of regulatory reform. This paper reviews the status quo, advantages and disadvantages of the proposed changes and the extent to which it addresses or does not address perceived issues arising from the financial crisis. |
| Keywords: | Financial regulatory reform; Consumer Financial Protection Agency; financial crisis; |
| JEL: | D18 G18 E44 |
| Date: | 2009–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16174&r=pke |
| By: | Rania Antonopoulos |
| Abstract: | Beyond loss of income, joblessness is associated with greater poverty, marginalization, and social exclusion; the current global crisis is clearly not helping. In this new Public Policy Brief, Research Scholar Rania Antonopoulos explores the impact of both joblessness and employment expansion on poverty, paying particular attention to the gender aspects of poverty and poverty-reducing public employment schemes targeting poor women. The author presents the results of a Levy Institute study that examines the macroeconomic consequences of scaling up South Africa's Expanded Public Works Programme by adding to it a new sector for social service delivery in health and education. She notes that gaps in such services for households that cannot afford to pay for them are mostly filled by long hours of invisible, unpaid work performed by women and children. Her proposed employment creation program addresses several policy objectives: income and job generation, provisioning of communities' unmet needs, skill enhancement for a new cadre of workers, and promotion of gender equality by addressing the overtaxed time of women. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levppb:ppb_101&r=pke |
| By: | Naritomi, Joana (Harvard University); Soares, Rodrigo R. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio)); Assunção, Juliano J. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio)) |
| Abstract: | This paper analyzes the determinants of local institutions and distribution of political power within a constant 'macro-institutional' setting. We show that characteristics of Brazilian municipalities related to institutional quality and distribution of political power are partly inherited from the colonial histories experienced by different areas of the country. Municipalities with origins tracing back to the sugar-cane colonial cycle – characterized by a polarized and oligarchic socioeconomic structure – display today more inequality in the distribution of endowments (land). Municipalities with origins tracing back to the gold colonial cycle – characterized by a heavily inefficient presence of the Portuguese state – display today worse governance practices and less access to justice. The colonial rent-seeking episodes are also correlated with lower provision of public goods and lower income per capita. |
| Keywords: | institutions, colonial heritage, rent-seeking, geography, Brazil |
| JEL: | N26 O17 O40 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4276&r=pke |