Working Papers
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Working Paper Series
The Focus of Academic Economics: Before and After the Crisis
May 2018
Has the global financial crisis of 2007 had a visible impact on the economics profession?
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Working Paper Series
Where Do Profits and Jobs Come From? Employment and Distribution in the US Economy
May 2018
“Meso” level analysis of 16 producing sectors sheds light on broad forces shaping growth of employment and profits.
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Working Paper Series
The Price of a Vote: Evidence from France, 1993-2014
Feb 2018
Money in politics is not a strictly American phenomenon. In France, despite strong campaign finance laws, campaign donations have a direct influence on legislative and municipal election results.
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Working Paper Series
Persistent Effects of Autonomous Demand Expansions
Feb 2018
The prevailing wisdom that aggregate demand ‘shocks’ determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various streams of literature in the last decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of recessions and negative aggregate demand shocks (Blanchard et al. 2015; Martin et al. 2015).
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Working Paper Series
Inequality in the 21st century
Jan 2018
A critical analysis of Piketty’s work
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Working Paper Series
Lending a Hand: How Small Black Businesses Supported the Civil Rights Movement
Jan 2018
A large literature has detailed the seminal roles played in the Civil Rights Movement by activists, new political organizations, churches, and philanthropies. But black-owned businesses also provided a behind-the-scenes foundation for the movement’s success.
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Working Paper Series
Industrial Structure and Party Competition in an Age of Hunger Games: Donald Trump and the 2016 Presidential Election
Jan 2018
The U.S. presidential election of 2016 featured frontal challenges to the political establishments of both parties and perhaps the most shocking election upset in American history.
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Working Paper Series
Corporate Scandals and Regulation
Dec 2017
Are regulatory interventions delayed reactions to market failures or can regulators proactively pre-empt corporate misbehavior?
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Working Paper Series
US Pharma’s Financialized Business Model
Jul 2017
Price gouging in the US pharmaceutical drug industry goes back more than three decades.
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Working Paper Series
The Qualitative Expectations Hypothesis
Jun 2017
Model Ambiguity, Consistent Representations of Market Forecasts, and Sentiment
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Working Paper Series
The Functions of the Stock Market and the Fallacies of Shareholder Value
Jun 2017
Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong.
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Working Paper Series
‘Many-citedness’
May 2017
Citations Measure More Than Just Scientific Impact
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Working Paper Series
The New Normal: Demand, Secular Stagnation and the Vanishing Middle-Class
May 2017
The U.S. economy is widely diagnosed with two ‘diseases’: a secular stagnation of potential U.S. growth, and rising income and job polarization. The two diseases have a common root inthe demand shortfall, originating from the ‘unbalanced’ growth between technologically ‘dynamic’ and ‘stagnant’ sectors.
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Working Paper Series
The Political Economy of Mass Incarceration: An Analytical Model
May 2017
This paper presents a model of mass incarceration in the United States, which has the largest proportion of its population imprisoned among advanced countries.
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Working Paper Series
The Equal Employment Opportunity Omission
Dec 2016
On June 2, 1965, under a mandate established by Title VII of the Civil Rights Act of 1964, the U.S. Congress created the Equal Employment Opportunity Commission (EEOC) to enforce federal anti-discrimination laws related to employment. The expectation was that African Americans would be prime beneficiaries of the EEOC.
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Working Paper Series
The Value-Extracting CEO: How Executive Stock-Based Pay Undermines Investment in Productive Capabilities
Dec 2016
The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest in productive capabilities, the company can afford to make cash distributions to shareholders. Motivating corporate resource-allocation decisions are the modes of remuneration that incentivize and reward the top executives of these companies. A sound analysis of the operation and performance of a modern economy requires an understanding of not only how much these executives are paid but also the ways in which the prevailing system of executive pay influences their decisions to allocate corporate resources.
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Working Paper Series
The EuroZone “Debt” Crisis: Another “Center” – “Periphery” Crisis Under Financial Globalization?
Nov 2016
This paper analyzes the Euro crisis in light of the experience of center-periphery relations over the last 40 years of renewed financial globalization.
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Working Paper Series
The Personal Wealth Interests of Politicians and the Stabilization of Financial Markets
Oct 2016
We examine whether personal wealth interests affect politicians’ decisions about stabilizing financial markets.
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Working Paper Series
The Mismeasure of Mammon: Uses and Abuses of Executive Pay Data
Aug 2016
Report to the Institute for New Economic Thinking on the statistical measurement and policy implications of the compensation of the highest- paid U.S. corporate executives
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Working Paper Series
The performativity of potential output: Pro-cyclicality and path dependency in coordinating European fiscal policies
Aug 2016
This paper analyzes the performative impact of the European Commission’s model for estimating ‘potential output’, which is used as a yardstick for measuring the ‘structural budget balance’ of EU countries and, hence, is crucial for coordinating European fiscal policies.
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Working Paper Series
Political Lending
Aug 2016
Using a unique dataset provided by the Center for Responsive Politics (CRP), we document a direct channel through which financial institutions contribute to the net worth of members of the U.S. Congress, particularly those sitting on the finance committees in the Senate and the House of Representatives.
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Working Paper Series
How Money Drives US Congressional Elections
Aug 2016
Social scientists have stubbornly held that money and election outcomes are at most weakly linked. New research provides clear evidence to the contrary.
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Working Paper Series
Latent Instrumental Variables: A Critical Review
Jul 2016
This paper considers the estimation problem in linear regression when endogeneity is present, that is, when explanatory variables are correlated with the random error, and also addresses the question of a priori testing for potential endogeneity.
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Working Paper Series
Ethics vs. Ethos in US and UK Megabanking
May 2016
Company law in the US and UK fails to acknowledge that authorities’ propensity to rescue giant banks from the consequences of insolvency assigns taxpayers a coerced and badly structured equity stake in too-big-to-fail institutions.
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Working Paper Series
Stock-Market Expectations: Econometric Evidence that both REH and Behavioral Insights Matter
May 2016
Behavioral finance views stock-market investors’ expectations as largely unrelated to fundamental factors. Relying on survey data, this paper presents econometric evidence that fundamentals are a major driver of investors’ expectations.
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Working Paper Series
On Historical Household Budgets
May 2016
The paper argues that household budgets are the best starting point for investigating a number of big questions related to the evolution of the living standards during the last two-three centuries.
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Working Paper Series
Luigi Pasinetti and the Political Economy of Growth and Distribution
Mar 2016
This paper provides a careful and synthetic overview of his contributions as well as a reconstruction of Pasinetti’s philosophical approach to economics as a science meant to serve humanity.
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Working Paper Series
A Method for Agent-Based Models Validation
Mar 2016
This paper proposes a new method to empirically validate simulation models that generate artificial time series data comparable with real-world data.
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Working Paper Series
Carbon Emissions and Economic Growth: Production-based versus Consumption-based Evidence on Decoupling
Mar 2016
We assess the Carbon-Kuznets-Curve hypothesis using internationally consistent and comparable production-based versus consumption-based CO2 emissions data for 40 countries (and 35 industries) during 1995-2007 from the World Input Output Database (WIOD).
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Working Paper Series
Comments on Paul Davidson’s “Full Employment, Open Economy Macroeconomics, and Keynes’ General Theory: Does the Swan Diagram Suffice?”
Feb 2016
This is a response to a critique by Paul Davidson of our 2013 book Keynes: Useful Economics for the World Economy and related work, where we describe, amongst other things, how the Swan diagram can be used to show how economies can use policy tools to achieve internal and external balance.
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Working Paper Series
Full Employment, Open Economy Macroeconomics, and Keynes’ General Theory: Does the Swan Diagram Suffice?
Feb 2016
This paper provides critical comments on the Peter Temin - David Vines promotion of the basic Swan Diagram as (1) a policy tool to encourage any individual debtor nation experiencing balance of payment deficits to reduce its exchange rate in order to expand exports and reduce imports and (2) the Swan Diagram as a simple model for understanding Keynes’s General Theory for an Open Economy.
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Working Paper Series
Household Borrowing and the Possibility of “Consumption- Driven, Profit-Led Growth”
Jan 2016
We first show that, with a Kaleckian structure that is consistent with Pasinetti (1962), the relationship between distribution and growth is more robust than conventional wisdom suggests. Next, we extend our model by incorporating borrowing and emulation effects into workers’ consumption behavior, under different assumptions about how debt is serviced.
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Working Paper Series
Understanding the Great Recession
Dec 2015
Some Fundamental Keynesian and Post-Keynesian Insights, with an Analysis of Possible Mechanisms to Achieve a Sustained Recovery
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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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Working Paper Series
Veiled Repression: Mainstream Economics, Capital Theory, and the Distributions of Income and Wealth
Dec 2015
The Cambridge UK vs USA capital theory debates of the 1960s showed that the workhorse mainstream growth model relies on unsustainable assumptions. Its standard interpretation is not consistent with the last four decades of data.
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Working Paper Series
Learning, Expectations, and the Financial Instability Hypothesis
Nov 2015
This paper analyzes what assumptions on formation of expectations are consistent with Minsky’s Financial Instability Hypothesis (FIH) and its corollaries.
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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
The Greek “Rescue”: Where Did the Money Go?
Nov 2015
This paper analyses the financial assistance provided to Greece in the first two rescue packages granted by the Troika (European Union, European Central Bank and IMF).
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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
Debt Servicing, Aggregate Consumption, and Growth
Nov 2015
We develop a neo-Kaleckian growth model that emphasizes the importance of consumption behavior.
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Working Paper Series
Elasticity and Discipline in the Global Swap Network
Nov 2015
This paper sketches the outlines of the new international monetary system that has emerged in the aftermath of the global financial crisis.
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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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Working Paper Series
Innovative Enterprise or Sweatshop Economics? In Search of Foundations of Economic Analysis
Oct 2015
By integrating the history of industrial development in Britain and the United States with the ideas of leading economic thinkers, this essay demonstrates the absurdity of perfect competition as the ideal of economic efficiency.
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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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Working Paper Series
The Cold War Hot House for Modeling Strategies at the Carnegie Institute of Technology
Oct 2015
US Military needs during the Cold War induced a mathematical modeling of rational allocation and control processes while simultaneously binding that rationality with computational reality. Modeling strategies to map the optimal to the operational ensued and eventually became a driving force in the development of macroeconomic dynamics.
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Working Paper Series
Exploring the Concept of Homeostasis and Considering its Implications for Economics
Sep 2015
The reality of human homeostasis expands the views on preferences and rational choice that are part of traditionally conceived Homo economicus and casts doubts on economic models that depend only on an “invisible hand” mechanism.
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Working Paper Series
Wealth Concentration, Income Distribution, and Alternatives for the USA
Sep 2015
US household wealth concentration is not likely to decline in response to fiscal interventions alone.
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Working Paper Series
Are Low Interest Rates Deflationary? A Paradox of Perfect- Foresight Analysis
Sep 2015
A prolonged period of extremely low nominal interest rates has not resulted in high inflation. This has led to increased interest in the “Neo-Fisherian” proposition according to which low nominal interest rates may themselves cause inflation to be lower.
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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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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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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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Working Paper Series
Change and Rationality in Macroeconomics and Finance Theory: A New Rational Expectations Hypothesis
Mar 2015
We call attention to the class of models that serve as the foundation for the rational expectations hypothesis (REH). Models in this class rule out completely any structural change that cannot be fully anticipated with a probabilistic or other quantitative rule. REH models are abstractions of rational decision-making, but only in a hypothetical world in which participants can fully anticipate when and how they might revise their understanding of the process driving outcomes.
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Working Paper Series
Household Income, Demand, and Saving: Deriving Macro Data with Micro Data Concepts
Mar 2015
We develop adjustments to align the NIPA measures of key household flows with cash flow concepts that better reflect household budgets and demand.
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Working Paper Series
New Evidence for the Present-Value Model of Stock Prices: Why the REH Version Failed Empirically
Feb 2015
Shiller (1981) and others have shown that the quantitative predictions of the REH present-value model are inconsistent with time-series data on stock prices and dividends. In this paper, we assess the empirical relevance of the model without explicitly representing how a rational market participant forecasts dividends and interest rates.
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Working Paper Series
Labor in the Twenty-First Century: The Top 0.1% and the Disappearing Middle-Class
Jan 2015
The ongoing explosion of the incomes of the richest households and the erosion of middle-class employment opportunities for most of the rest have become integrally related in the now-normal operation of the U.S. economy.
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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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Working Paper Series
Intra-Financial Lending, Credit, and Capital Formation
Dec 2014
This paper examines the effects of intra-financial lending – claims between financial institutions – on aggregate investment and credit to the non-financial sector in the United States.
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Working Paper Series
Skill Development and Sustainable Prosperity: Cumulative and Collective Careers versus Skill-Biased Technical Change
Dec 2014
There is widespread and growing concern about the availability of good jobs in the U.S. economy. Inequality has been growing for thirty years and is now at levels not seen since the 1920s. Stable and remunerative employment has become harder for U.S. workers to find.
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Working Paper Series
Long-term trends in intra-financial sector lending in the U.S. 1950 - 2012
Nov 2014
This paper examines the evolution of intra-financial sector lending in the United States, 1950- 2012, presenting estimates constructed from the Federal Reserve’s Flow of Funds Accounts.
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Working Paper Series
Inequality, the Great Recession, and Slow Recovery
Oct 2014
Rising inequality reduced income growth for the bottom 95 percent of the US personal income distribution beginning about 1980.
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Working Paper Series
The Political Movement that Dared not Speak its own Name: The Neoliberal Thought Collective Under Erasure
Aug 2014
Why do so many people who should know better argue that Neoliberalism ‘does not exist’?
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Working Paper Series
Who Invests in the High-Tech Knowledge Base?
May 2014
A nation must accumulate a high-tech knowledge base to prosper.
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Working Paper Series
Wage Increases, Transfers, and the Socially Determined Income Distribution in the USA
Apr 2014
This paper is based on a social accounting matrix (SAM) which incorporates the size distribution of income based on data from the BEA national accounts, the widely discussed 2012 CBO distribution study, and BLS consumer surveys.
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Working Paper Series
Three Measures of Environmental Inequality
Apr 2014
Using data on industrial air pollution exposure in the United States, we compute three measures of environmental inequality: the Gini coefficient of exposure, the ratio of median exposure of minorities to that of non-Hispanic whites, and the ratio of median exposure of poor households to that of nonpoor households.
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Working Paper Series
Crisis and Recovery in the German Economy: The Real Lessons
Mar 2014
Owing to its strong dependence on exports, Germany was among the economies hit hardest by the financial crisis.
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Working Paper Series
Sovereigns versus Banks: Credit, Crises and Consequences
Feb 2014
Two separate narratives have emerged in the wake of the Global Financial Crisis. One interpretation speaks of private financial excess and the key role of the banking system in leveraging and deleveraging the economy. The other emphasizes the public sector balance sheet over the private and worries about the risks of lax fiscal policies. However, the two may interact in important and understudied ways.
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Working Paper Series
Unemployment and Innovation
Jan 2014
This paper analyzes equilibrium, dynamics, and optimal decisions on the factor bias of innovation in a model of induced innovation.