The main point of this paper is that loanable funds macroeconomic models with their “natural” interest rate don’t fit with modern institutions and data. Before getting into the numbers, it makes sense to describe the models and how to think about macroeconomics in the first place.
The performativity of potential output: Pro-cyclicality and path dependency in coordinating European fiscal policies
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.
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
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.
Why a future tax on bank credit intermediation does not offset the stimulative effect of money finance deficits
This paper responds to a paper by Claudio Borio, Piti Disyatat and Anna Zabai “Helicopter Money: the Illusion of a Free Lunch”
Social scientists have stubbornly held that money and election outcomes are at most weakly linked. New research provides clear evidence to the contrary.
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.
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.
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.
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.
While the Neoliberal movement’s concerns extend into a broad political reorganization of society, it remains intimately connected with neoclassical economic thought.
If the government/CB together finance an increased fiscal deficit with permanent non-interest-bearing fiat money, then some private sector agents have to hold non-interest-bearing monetary base, and must continue to do so even when policy and market interest rates have moved away from the ZLB. How is this possible in an environment where most bank deposit money is potentially interest-bearing?
In the growing debate about the pros and cons of a monetary financed fiscal stimulus (a.k.a. helicopter money) it is argued by some participants that a money-financed stimulus will have no more effect than a debt financed stimulus since:
Karl Polanyi demonstrated that Classical Liberalism and current Neoliberalism were organized political movements, but their successes sparked political backlashes against laissez-faire economics — a dialectic that continues to shape politics to this day.
The following is based on Chapter 1 of my forthcoming book, Crisis and Sustainability. The Delusion of Free Markets.