Using Minsky to Simplify Financial Regulation

The basic error in the current regulatory approach embodied in Dodd-Frank is that it does very little to limit the creation of fictitious liquidity or to redirect the creation of that liquidity for financing capital development of the system. A more expeditious method of reform that could replace Dodd-Frank would be to ask if there were any reason why the fictitious-liquidity structures that have grown up in the process of deregulation are necessary for the operation of the economy. using_minsky (Download the full text in PDF format)

Recollecting Kalecki’s Studies of the US Economy Julio Lopez G

Michal Kalecki wrote an article on Government expenditures financed by taxes on profits, which set forth an interesting debate between him and Keynes, the latter being the editor of the Journal in which Kalecki's article was published. Later, in 1950s, Michal Kalecki wrote few empirical studies to substantiate his theory. Two of these papers dealt with the US economy, in which he adopted a novel method of analysis. However, his methodology did not have the deserved impact, even amongst his followers. This article revisits Kalecki's analysis to try and understand the recent evolution of the US economy. us_economy (Download the…

Austerity Measures Threaten Children and Poor Households : Recent Evidence in Public Expenditures from 128 Developing Countries Isabel Ortiz, Jingqing Chai and Matthew Cummins

In the wake of the food, fuel and financial shocks, a fourth wave of the global economic crisis began in 2010, viz., fiscal austerity. Updating earlier research by UNICEF, this working paper examines the latest IMF government spending projections for 128 developing countries, comparing the three periods of 2005-07 (pre-crisis), 2008-09 (fiscal expansion) and 2010-12 (fiscal contraction). It discusses the possible risks of the adjustment measures for social expenditures and summarises a series of alternative policy options. poor_households (Download the full text in PDF format)

Prioritizing Expenditures for a Recovery for All Isabel Ortiz, Jingqing Chai, Mathew Cummins, Gabriel Vergara

This UNICEF paper examines government expenditure projections for 126 low and middle income countries and their potential implications for children and poor households during the ongoing fragile economic recovery. While recognizing the importance of macroeconomic stability, the paper questions if the projected fiscal adjustment trajectory in a number of countries is conducive to the objective of protecting vulnerable households and the achievement of development goals such as the MDGs. (Financing options for pro-poor social spending are also explored). unicef (Download the full text in PDF format)

Surely Not the IMF Again? Jayati Ghosh

It has been some time now since the IMF lost its intellectual credibility, especially in the developing world. Its policy prescriptions were widely perceived to be rigid and unimaginative, applying a uniform approach to very different economies and contexts. They were also completely outdated even in theoretical terms, based on economic models and principles that have been refuted not only by more sophisticated heterodox analyses but also by further developments within neoclassical theory. What may have been more damning was how out of sync the policies proposed by the IMF have also been with the reality of economic processes in…

A World of Inequality Jayati Ghosh

Now Wall Street has made it official: the boom is finally over and the world economy is not going to be quite the same for a while. But before we think of how to deal with the current mess, we need to figure out what that boom actually meant for most people in the world. Everyone now knows it was unsustainable, a flimsy house of cards that greedy and irresponsible financial institutions could build because deregulation allowed dodgy practices. The economic boom drew rapaciously and fecklessly on natural resources. It was also deeply unequal. Contrary to general perception, most people…