The Economic Crisis of 2008 and the Added Worker Effect in Transition Countries
Tamar Khitarishvili

Modeling the Housing Market in OECD Countries
Philip Arestis and Ana Rosa González

The Problem of Excess Reserves, Then and Now
Walker F. Todd

On the Franco-German Euro Contradiction and Ultimate Euro Battleground
Jörg Bibow

Currency Concerns under Uncertainty
Sunanda Sen

Indirect Domestic Value Added in Mexico’s Manufacturing Exports, by Origin and Destination Sector
Gerardo Fujii-Gambero and Rosario Cervantes-Martínez

Wages, Exchange Rates, and the Great Inflation Moderation
Nathan Perry and Nathaniel Cline

How the Fed Reanimated Wall Street
Nicola Matthews

Expanding Social Protection in Developing Countries
Rania Antonopoulos

The 22nd Hyman P. Minsky conference, “Building a Financial Structure for a More Stable and Equitable Economy,” is underway.  Today featured speeches by James Bullard of the St. Louis Fed, Eric Rosengren of the Boston Fed, and Thomas Hoenig of the FDIC.

This year’s event combines the Minsky conference’s usual focus on financial stability and financial reform with another of Minsky’s abiding intellectual interests:  full employment policy.  This was reflected in today’s varied panel sessions on measuring inequality, Minskyan employment policies, and the current state of financial regulation.

Follow the second and third days of the conference, livestreamed here. Tomorrow will feature Narayana Kocherlakota, Sarah Bloom Raskin, Alan Blinder, James Galbraith, Jan Kregel, and L. Randall Wray, among many others.

Audio of all sessions and speakers is posted here; media coverage can be found here in the press room.

Hyman Minsky is probably best known for his work on financial instability and financial reform, but he also wrote extensively about how to address the persistent problem of all those left behind by our increasingly financialized economy; about how to design policies that would put an end to income poverty in the midst of plenty. Despite the fact that far more attention has been paid to his writing on financial fragility, these were intimately related issues in Minsky’s research, connecting the financial and “real” economies.

As with his work on finance, Minsky’s approach to poverty did not fit comfortably within the confines of the status quo. With “trickle-down” on one side, pure tax-and-transfer approaches on the other, and vague calls for retraining floating somewhere in the middle, Minsky found the conventional menu of policy options incomplete and inadequate (a menu that has changed very little over the last several decades). Calling for “upgrading” workers without ensuring there are enough jobs to go around is, as Minsky put it, “analogous to the great error-producing sin of infielders — throwing the ball before you have it.” What’s missing, he thought, is a commitment to ensuring that paying jobs are available to all who are ready and able to work; a commitment to “tight full employment.” The question is how to get there without sparking runaway inflation or inducing financial crises. Private markets, left to their own devices, aren’t going to get us there. For part of the answer, Minsky turned to a forgotten side of the New Deal:  direct job creation.

In the interests of providing a more complete picture of Minsky’s intellectual legacy, the Levy Institute has published a collection of his central writings on poverty and full employment: Ending Poverty: Jobs, Not Welfare. The chapters span roughly three decades of Minsky’s writing and feature four never-before-published pieces. The earliest were written in the context of the “War on Poverty” of the Kennedy and Johnson years, but readers will find more than mere historical interest here. Minsky’s critiques of both the “neoclassical synthesis” and the welfare state hold up rather well. If anything, the material is even more relevant today, given our widening income inequality and chronic rates of long-term unemployment — and the fact that the battle against poverty, while not won, has largely been forgotten.

The paperback is now available on Amazon; the Kindle version will be appearing shortly.

William H. Janeway
Institute for New Economic Thinking and Warburg Pincus Technology

Monday, March 4, 2013  4:45 p.m.
Bard College
Reem-Kayden Center for Science and Computation (RKC), Room 103

Excerpt from Doing Capitalism:

“The Innovation Economy begins with discovery and culminates in speculation. Over some 250 years, economic growth has been driven by successive processes of trial and error and error and error: upstream exercises in research and invention, and downstream experiments in exploiting the new economic space opened by innovation. Each of these activities necessarily generates much waste along the way: dead-end research programs, useless inventions and failed commercial ventures. In between, the innovations that have repeatedly transformed the architecture of the market economy, from canals to the internet, have required massive investments to construct networks whose value in use could not be imagined at the outset of deployment. And so at each stage the Innovation Economy depends on sources of funding that are decoupled from concern for economic return.”

About the Author: continue reading…

Are your student advisees looking for an opportunity to advance their career goals with a graduate degree? The Levy Economics Institute Master of Science in Economic Theory and Policy can help them prepare themselves for responsible positions in government, business, education and research.

The M.S. in Economic Theory and Policy degree is designed to meet the preprofessional needs of undergraduates in economics and related fields. The terminal nature of the M.S. degree provides a strong signal that the graduate is pursuing career-stage posts and not simply transitional employment. All students participate in a graduate research assistantship at the Levy Economics Institute of Bard College—an economic policy think tank with more than 25 years of public policy research experience.

With the “deadline season” for graduate school applications approaching, please advise your students to consider our program. Click here to find out more. Application deadline: March 30, 2013

Sincerely,

Office of the Director
Master of Science in Economic Theory and Policy
Levy Economics Institute of Bard College
845-758-7776
levyms@levy.org

A conference organized by the Levy Economics Institute of Bard College with support from the Ford Foundation.

April 17–19, 2013

Ford Foundation
320 East 43 Street, New York City

In 2008–09, the world experienced its worst financial and economic crisis since the Great Depression. Global employment and output collapsed, and an estimated 84 million people fell into extreme poverty. Given the fragility and uneven progress of the economic recovery, social conditions are expected to improve only slowly. Meanwhile, austerity measures in response to high government debt in some of the advanced economies are making the recovery even more uncertain.

It’s time to put global finance back in its proper place as a tool to achieving sustainable development. This means substantial downsizing, careful reregulation, universal social protections, and an active, permanent employment-creation program. Therefore, the 2013 Minsky Conference will address both financial reform and poverty in the context of Minsky’s work on financial instability and his proposal for a public job guarantee. Panels will focus on the design of a new, more robust, and stable financial architecture; fiscal austerity and the sustainability of the US economic recovery; central bank independence and financial reform; the larger implications of the eurozone debt crisis for the global economic system; improving governance of the social safety net; the institutional shape of the future financial system; strategies for promoting poverty eradication and an inclusive economy; sustainable development and market transformation; time poverty and the gender pay gap; and policy and regulatory challenges for emerging-market economies.

To register, visit the conference website.

A list of conference participants is below the fold. continue reading…

Registration is now open for the Levy Institute’s fourth Hyman P. Minsky Summer Seminar, to be held on the Bard College campus in June 2013. The annual Summer Seminar provides a rigorous discussion of both the theoretical and the applied aspects of Minsky’s economics, and is geared toward recent graduates, graduate students, and those at the beginning of their academic or professional careers. Application deadline: March 31, 2013. Apply early, as space is limited. See here for more information.

Last week, a short walk from the Brandenburg Gate, the Levy Institute held its most recent Hyman P. Minsky Conference on Financial Instability.  The two day conference in Berlin featured a mix of central bankers, academics, politicians, and financial practitioners and dealt with issues related to the eurozone debt crisis, the Federal Reserve, signs of instability in China, Dodd-Frank and financial reform, the payments system (including the threat of cyber attacks and the potential destabilizing effect of the development of alternative payments technologies), indexes of financial fragility, and a host of other intriguing topics.

On the first day, Vítor Constâncio, Vice President of the European Central Bank, delivered a morning speech that highlighted the poverty of the dominant economic thinking underlying the flawed institutional design of the European Monetary Union, with its centralized monetary policy and decentralized fiscal and financial stability policy.

“In the pre-EMU economic modelling world,” said Constâncio, “there was no need to counter financial imbalances and financial instability as the financial sector did not play a crucial role from a macroeconomic perspective.  Similarly, under the assumption of self-equilibrating markets, there was no need to monitor macroeconomic imbalances and disequilibria on the labour, product or financial markets.  With an assumed stable private sector, apart from exogenous shocks, the only source of instability acknowledged were governments and their fiscal profligacy.”  In running through the flaws in these theoretical assumptions, Constâncio noted Minsk’s remark in Stabilizing an Unstable Economy that “… for an economic theory to be relevant, what happens in the world must be a possible event in the theory.”

Against that background, Constâncio traced a path for reform of the eurozone structure. He also included a discussion of the reasoning behind the European Central Bank’s policy on Outright Monetary Transactions (OMT)—the ECB’s bond purchasing program, designed to bring down rising interest rates on peripheral government debt—and said after the speech that he expects Spain to apply for the program.  He portrayed OMT as a way of getting peripheral nations out of “a vicious circle of rising interest rates, falling growth and deteriorating public finances.”  (In other words, as a way of getting out of what Greg Hannsgen and Dimitri Papadimitriou have dubbed a “fiscal trap.”  OMT, Hannsgen and Papadimitriou observe, partially moves the EMU away from its effectively “metallist” currency setup.)

The text of Constancio’s speech can be read here.

Audio of all the conference presentations and sessions can be found here.

An upcoming Levy Institute conference:

From November 26 to 27, the Levy Economics Institute of Bard College will gather top policymakers, economists, and analysts at the Hyman P. Minsky Conference on Financial Instability to gain a better understanding of the causes of financial instability and its implications for the global economy. The conference will address the challenge to global growth affected by the eurozone debt crisis; the impact of the credit crunch on economic and financial markets; the larger implications of government deficits and the debt crisis for U.S., European, and Asian economic policy; and central bank independence and financial reform.  Organized by the Levy Economics Institute and ECLA of Bard with support from the Ford Foundation, The German Marshall Fund of the United States, and Deutsche Bank AG, the conference will take place Monday and Tuesday, November 26 to 27, in Frederick Hall, 4th fl., Deutsche Bank AG, Unter den Linden 13–15, Berlin.

A full schedule and list of participants can be found here.

An announcement from the Levy Institute:

Starting in fall 2013, the Levy Economics Institute will begin offering the Master of Science in Economic Theory and Policy, a two-year degree program designed to meet the preprofessional needs of undergraduates in economics and finance. Headed by Senior Scholar and Program Director Jan Kregel, this innovative program draws on the expertise of Institute scholars and select Bard College faculty, and emphasizes empirical and policy analysis through specialization in one of four key research areas: macroeconomic theory, policy, and modeling; monetary policy and financial structure; distribution of income, wealth, and well-being, including gender equality and time poverty; and employment and labor markets.

The Levy Economics Institute Master of Science in Economic Theory and Policy degree program offers students a marketable set of skills and a strong understanding of economic and policy models at both the macro and micro levels, with direct application to a broad range of career paths. Thanks to the close links between our research agenda and the program’s core curriculum, students experience graduate education as a practicum, and all students participate in a graduate research assistantship at the Institute. There is also a 3+2 dual-degree option for undergraduates that leads to both a BA and the MS in five years.

For more information, visit www.bard.edu/levyms.