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on Post Keynesian Economics |
| By: | James Felkerson |
| Abstract: | There have been a number of estimates of the total amount of funding provided by the Federal Reserve to bail out the financial system. For example, Bloomberg recently claimed that the cumulative commitment by the Fed (this includes asset purchases plus lending) was $7.77 trillion. As part of the Ford Foundation project "A Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis," Nicola Matthews and James Felkerson have undertaken an examination of the data on the Fed's bailout of the financial system—the most comprehensive investigation of the raw data to date. This working paper is the first in a series that will report the results of this investigation. The extraordinary scope and magnitude of the recent financial crisis of 2007-09 required an extraordinary response by the Fed in the fulfillment of its lender-of-last-resort function. The purpose of this paper is to provide a descriptive account of the Fed's response to the recent financial crisis. It begins with a brief summary of the methodology, then outlines the unconventional facilities and programs aimed at stabilizing the existing financial structure. The paper concludes with a summary of the scope and magnitude of the Fed's crisis response. The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion. |
| Keywords: | Global Financial Crisis; Fed Bailout; Lender of Last Resort; Term Auction Facility; Central Bank Liquidity Swaps; Single Tranche Open Market Operation; Term Securities Lending Facility and Term Options Program; Maiden Lane; Primary Dealer Credit Facility; Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility; Commercial Paper Funding Facility; Term Asset-backed Securities Loan Facility; Agency Mortgage-backed Security Purchase Program; AIG Revolving Credit Facility; AIG Securities Borrowing Facility |
| JEL: | E58 E65 G01 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_698&r=pke |
| By: | Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza |
| Abstract: | Fiscal austerity is now a worldwide phenomenon, and the global growth slowdown is highly unfavorable for policymakers at the national level. According to our Macro Modeling Team's baseline forecast, fears of prolonged stagnation and a moribund employment market are well justified. Assuming no change in the value of the dollar or interest rates, and deficit levels consistent with the Congressional Budget Office's most recent "no-change" scenario, growth will remain very weak through 2016 and unemployment will exceed 9 percent. In an alternate scenario, the authors simulate the effect of new austerity measures that are commensurate with the implementation of large federal budget cuts. Here, growth falls to 0.06 percent in the second quarter of 2014 before leveling off at approximately 1 percent and unemployment rises to 10.7 percent by the end of 2016. In their fiscal stimulus scenario, real GDP growth increases very quickly, unemployment declines to 7.2 percent, and the US current account balance reaches 1.9 percent by the end of 2016—with a debt-to-GDP ratio that, at 97.4 percent, is only slightly higher than in the baseline scenario. An export-led growth strategy may accomplish little more than drawing a small number of scarce customers away from other exporting nations, and the authors expect no net contribution to aggregate demand growth from the financial sector. A further fiscal stimulus is clearly in order, they say, but an ill-timed round of fiscal austerity could result in a perilous situation for Washington. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_dec_11&r=pke |
| By: | Peter Wagner |
| Abstract: | Are 'modern societies' necessarily democratic societies and capitalist (or: market) societies? This is what most of the social sciences of the post-Second World War period have assumed, while only some strands of critical, often Marx-inspired approaches contested this connection. This essay briefly reconsiders the link between democracy and capitalism both in theoretical and historical terms to then advance a hypothesis about the current constellation of political and economic modernity which seems to be marked by a paradox. On the one hand, both democracy, apparently spreading through 'waves of democratization', and capitalism, as the outcome of economic globalization, seem to be without alternative. On the other hand, current capitalism is highly crisis-ridden and democracy, at least in Europe, witnesses strong signs of disaffection. In this light, the essay proposes to see the current constellation as the outcome of a democratic crisis of capitalism during the 1970s. The reasoning proceeds in five steps. First, we will reconsider theories that have assumed that there is a strong conceptual connection between democracy and capitalism. Secondly, we will briefly review the history of the relation between modern capitalism and modern democracy from their beginnings until the 1970s to refine the ideas about such conceptual link. These two steps, thirdly, will allow for an interim conclusion to understand the double crisis of the 1970s, of both capitalism and democracy, an understanding that opens the path to two observations – the fourth and fifth steps – on the current condition of global capitalism and the alleged global movement of democratisation. First, the developments of the past four decades can be seen as a transformation of capitalism in reaction to democratic demands. Extrapolating from this insight, second, one may ask whether there is not a basic tension between economic and political modernity, given the evident difficulty of keeping political citizenship connected to socio-economic citizenship. |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:44&r=pke |
| By: | Katharine Bradbury |
| Abstract: | Much of America's promise is predicated on economic mobility—the idea that people are not limited or defined by where they start, but can move up the economic ladder based on their efforts and accomplishments. Family income mobility—changes in individual families' income positions over time—is one indicator of the degree to which the eventual economic wellbeing of any family is tethered to its starting point. In the United States, family income inequality has risen from year to year since the mid-1970s; given this rising cross-sectional inequality, changes over time in mobility determine the degree to which long-term income is also increasingly unequally distributed. ; Using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature, this paper examines family income mobility levels and trends for U.S. working-age family heads and spouses during the time span 1969–2006, based on a post-tax, post-transfer concept of income adjusted for family size. By most measures, mobility is lower in more recent periods (1995–2005) than in the late seventies and the eighties (the 1977–1987 or 1981–1991 periods). Comparing results based on pre-government income suggests that an increasingly redistributive tax and transfer system contributed to rising mobility into the 1980s, but that its impact has since waned. Overall, the evidence indicates that over the 1969-to-2006 time span, family income mobility across the distribution decreased, families' later-year incomes increasingly depended on their starting place, and the distribution of families' lifetime incomes became less equal. |
| Keywords: | Income distribution ; Labor mobility ; Migration, Internal |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:11-10&r=pke |