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Full-Text Articles in Social and Behavioral Sciences

Socialization Of Risks Without Socialization Of Investment: The Minsky Paradox And The Structural Contradiction Of Big Government Capitalism, Minqi Li Jan 2009

Socialization Of Risks Without Socialization Of Investment: The Minsky Paradox And The Structural Contradiction Of Big Government Capitalism, Minqi Li

PERI Working Papers

A big government sector is indispensable for the normal operations of modern capitalist economy. However, the very success of the big government institutions encourages private investors to engage in excessive risk-taking activities, leading to growing financial fragility and frequent financial crises. The crises necessitate government interventions, forcing the government to run large deficits during recessions. These deficits, however, are not offset by surpluses during expansions. As a result, there is a tendency for the government debt to rise in relation to GDP. The government debt-GDP ratios cannot keep rising indefinitely. Beyond certain point, the debt-GDP ratio could be so high ...


The Interaction Of Metropolitan Cost-Of-Living & The Federal Earned Income Tax Credit: One Size Fits All?, Jeffrey P. Thompson, Katie Fitzpatrick Jan 2009

The Interaction Of Metropolitan Cost-Of-Living & The Federal Earned Income Tax Credit: One Size Fits All?, Jeffrey P. Thompson, Katie Fitzpatrick

PERI Working Papers

This paper explores the interaction between the federal Earned Income Tax Credit (EITC) and the cost-of-living faced by single mothers. After the 1993 EITC expansion, we identify up to a 10 percentage point increase in labor force participation for single mothers in the lowest cost areas but no discernable response in the highest cost areas. We conclude that the EITC’s welfare-enhancing properties are undermined by the interaction of the program’s fixed national rules and geographic variation in wages and cost-of-living. In addition, our findings suggest that the EITC does little to reduce joblessness in many of the nation ...


Goodwin Or Kalecki In Demand? Functional Income Distribution And Aggregate Demand In The Short Run, Engelbert Stockhammer, Robert Stehrer Jan 2009

Goodwin Or Kalecki In Demand? Functional Income Distribution And Aggregate Demand In The Short Run, Engelbert Stockhammer, Robert Stehrer

PERI Working Papers

In a seminal paper on Marxian business cycle theory Goodwin (1967) presented a model, which assumed that a higher wage share leads to lower investment and thus a general economic slowdown. In contrast Kalecki (1971) was arguing that a higher wage share would have an expansionary effect because the consumption propensity out of wage income is higher than that out of profit income. Based on a general model that allows for wage-led as well as profit-led demand regimes, this paper estimates the effects of a change in the wage share on aggregate private domestic demand with quarterly data for 12 ...


The Effectiveness Of Monetary Policy Reconsidered, John Weeks Jan 2009

The Effectiveness Of Monetary Policy Reconsidered, John Weeks

PERI Working Papers

This paper inspects the standard policy rule that under a flexible exchange rate regime with perfectly elastic capital flows monetary policy is effective and fiscal policy is not. The logical validity of the statement requires that the effect of an exchange rate change on the domestic price level be ignored. The price level effect is noted in some textbooks, but not formally analysed. When it is subjected to a rigorous analysis, the interaction between changes in the exchange rate and the domestic price level significantly alters the standard policy rule. The logically correct statement would be, under a flexible exchange ...


Unemployment Compensation And High European Unemployment: A Reassessment With New Benefit Indicators, David R. Howell, Miriam Rehm Jan 2009

Unemployment Compensation And High European Unemployment: A Reassessment With New Benefit Indicators, David R. Howell, Miriam Rehm

PERI Working Papers

Generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment. The effects of benefit generosity are more ambiguous in a broader behavioral framework in which workers get substantial disutility from unemployment controlling for income, and know that unemployment has scarring effects in the future. The micro evidence suggests modest effects of changes in generosity, but there are reasons to doubt that the impacts on national unemployment rates are consequential. The strongest evidence for the orthodox prediction comes from cross-country regressions on the OECD’s gross replacement rate (GRR), but we find little support in the ...


The Simple Analytics Of Debt-Driven Business Cycles, Thomas I. Palley Jan 2009

The Simple Analytics Of Debt-Driven Business Cycles, Thomas I. Palley

PERI Working Papers

This paper explores the economics of debt-driven business cycles, distinguishing between Keynesian and new Keynesian approaches. Keynesians emphasize the impact of borrowing and debt on aggregate demand (AD), whereas new Keynesians emphasize the impact on aggregate supply (AS). A unique Keynesian feature is emphasis on debtor – creditor debt-service income transfers. Business cycles result from two mechanisms. One is the multiplier – accelerator AD mechanism. The second is a predator – prey mechanism whereby increased income feeds the level of debt, but the level of debt preys on the level of income. Both the Keynesian and new Keynesian approaches are logically coherent, but ...


The Social Construction Of Successful Market Reforms, David Stuckler, Lawrence King, Greg Patton Jan 2009

The Social Construction Of Successful Market Reforms, David Stuckler, Lawrence King, Greg Patton

PERI Working Papers

The transition from socialism to capitalism has spawned a large literature on comparative policy reforms. While many sociologists using qualitative data have concluded that neo-liberal reforms led to negative outcomes, a large body of cross-national literature, mostly from economics and political science, claims that more neo-liberal reforms produced better economic and political outcomes. These latter studies almost all use measures of policy reform constructed by economists at the European Bank for Reconstruction and Development (EBRD). We show, using the EBRD’s own data, that their indices of progress in market reforms are biased in the direction of positive growth. That ...


Response To “Seven Myths About Green Jobs” And “Green Jobs Myths”, Robert Pollin Jan 2009

Response To “Seven Myths About Green Jobs” And “Green Jobs Myths”, Robert Pollin

PERI Working Papers

No abstract provided.


On The Nature And Causes Of The Collapse Of The Wealth Of Nations, 2007/2008: The End Of A Façade Called Globalization, Erinç Yeldan Jan 2009

On The Nature And Causes Of The Collapse Of The Wealth Of Nations, 2007/2008: The End Of A Façade Called Globalization, Erinç Yeldan

PERI Working Papers

This paper investigates the 2007/2008 crisis which has been hailed as the most devastating (and complex) crisis of capitalism since the great depression of 1929. It further discusses the future trends in global capitalism with special emphasis on the expected future developments that are likely to be experienced in the world economy at large. The main argument of the paper is that the 2007/2008 crisis had not been the end result of a series of technical errors or ad hoc developments that occurred on their own, but should be regarded as the result of the systemic imbalances of ...


Could International Labor Rights Play A Role In U.S. Trade?, Christian E. Weller Jan 2009

Could International Labor Rights Play A Role In U.S. Trade?, Christian E. Weller

PERI Working Papers

During its last complete business cycle, from 2001 to 2007, the United States experienced unsustainably high trade deficits. Policymakers are considering a number of measures to avoid a recurrence of such large external imbalances. One such measure is the promotion of better labor rights around the world. Proponents argue that higher labor standards would boost U.S. exports by increasing income growth abroad and reduce U.S. imports by shrinking international price differences. Opponents of such a policy move argue that it is disguised protectionism that will impede trade and harm living standards in the United States and abroad. In ...


From The Crisis Of Distribution To The Distribution Of The Costs Of The Crisis: What Can We Learn From Previous Crises About The Effects Of The Financial Crisis On Labor Share?, Özlem Onaran Jan 2009

From The Crisis Of Distribution To The Distribution Of The Costs Of The Crisis: What Can We Learn From Previous Crises About The Effects Of The Financial Crisis On Labor Share?, Özlem Onaran

PERI Working Papers

The paper analyzes the possible distributional consequences of the global crisis based on the lessons of the past crises experiences. The decline in the labor share across the globe has been a major factor that led to the current global crisis. What we are going through is a crisis of distribution, and similarly the policy reactions to the crisis are part of a distributional struggle. The paper presents the effects of the former crises in the developing countries and in Japan on income distribution, wages, and unemployment. This comparison is important not only because it compares developing vs. developed country ...


New Critical Perspectives On The U.S. And The Post-Wwii Global Economy: Brenner, Harvey, And Pollin, Merlin Chowkwanyun Jan 2009

New Critical Perspectives On The U.S. And The Post-Wwii Global Economy: Brenner, Harvey, And Pollin, Merlin Chowkwanyun

PERI Working Papers

In the current economic crisis, left and progressive political economy has enjoyed renewed attention and credibility, both inside and outside of academia. This Working Paper has two goals. First, it surveys the important recent contributions to this literature by Robert Brenner, David Harvey, and Robert Pollin, summarizing key arguments and identifying generative research questions and theoretical heuristics for further inquiry. Second, it reads these works alongside several tendencies in the recent history of the Anglo-American left and considers how they might help to forge more fruitful dialogue between analyses of social movements and economic structures, too often studied apart. Throughout ...


Rethinking The Economics Of Capital Mobility And Capital Controls, Thomas I. Palley Jan 2009

Rethinking The Economics Of Capital Mobility And Capital Controls, Thomas I. Palley

PERI Working Papers

This paper reexamines the issue of international financial capital mobility, which has become today’s economic orthodoxy. The policy discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for managed capital flows. The case for capital mobility rests on neo-classical economic efficiency arguments and neo-liberal political arguments. The case against capital mobility is based on Keynesian macroeconomic inefficiency arguments, neo-Walrasian market failure arguments ...


China And The Latin America Commodities Boom: A Critical Assessment, Kevin P. Gallagher, Roberto Porzecanski Jan 2009

China And The Latin America Commodities Boom: A Critical Assessment, Kevin P. Gallagher, Roberto Porzecanski

PERI Working Papers

In this paper we analyze the extent to which Chinese demand enhanced the performance of Latin American economies in the period of economic boom that took place from the turn of the century until the run up to the financial and economic crisis of 2008-2009. It has been argued that China’s rise has been a blessing for the region because Chinese demand boosted exports and in part caused a hike in commodities prices worldwide. We find that the direct impact on the region’s exports was much smaller than what was touted. What’s more, we find that there ...


Social Democratic And Socialist Policies, John King Jan 2009

Social Democratic And Socialist Policies, John King

PERI Working Papers

No abstract provided.


Measuring Corporate Environmental Justice Performance, Michael Ash, James K. Boyce Jan 2009

Measuring Corporate Environmental Justice Performance, Michael Ash, James K. Boyce

PERI Working Papers

Measures of corporate environmental justice performance can be a valuable tool in eorts to promote corporate social responsibility and to document systematic patterns of environmental injustice. This paper develops such a measure based on the extent to which toxic air emissions from industrial facilities disproportionately impact racial and ethnic minorities and low-income people. Applying the measure to 100 major corporate air polluters in the United States, we nd wide variation in the extent of disproportional exposures. In 54 cases, minorities, who represent 31.8 percent of the U.S. population, bear excess burden; in 15 of these cases, the minority ...


The Potential Revenue From Financial Transactions Taxes, Dean Baker, Robert Pollin, Travis Mcarthur, Matt Sherman Jan 2009

The Potential Revenue From Financial Transactions Taxes, Dean Baker, Robert Pollin, Travis Mcarthur, Matt Sherman

PERI Working Papers

No abstract provided.


Public Investment, Industrial Policy And U.S. Economic Renewal, Robert Pollin, Dean Baker Jan 2009

Public Investment, Industrial Policy And U.S. Economic Renewal, Robert Pollin, Dean Baker

PERI Working Papers

The U.S. economy faces enormous questions and challenges as it attempts to recover from the col-lapse of 2008-09. Some of the most pressing questions are a series of longer-term, structural chal-lenges: Can we establish a growth engine driven by something other than financial bubbles? Can we renew the automobile industry and, more generally, reestablish a healthy manufacturing sector? Can we accomplish these various tasks while also rebuilding the economy on a new foundation of clean energy as opposed to fossil fuel energy sources? Addressing these longer-term challenges is the over-arching theme of this paper. Following an introductory discussion, in ...


Public Policy Options To Build Wealth For America’S Middle Class, Christian E. Weller, Amy Helburn Jan 2009

Public Policy Options To Build Wealth For America’S Middle Class, Christian E. Weller, Amy Helburn

PERI Working Papers

No abstract provided.


Labor Productivity: A Comparative Analysis Of The European Union And United States, 1994-2007, Enrique Palazuelos, Rafael Fernández Jan 2009

Labor Productivity: A Comparative Analysis Of The European Union And United States, 1994-2007, Enrique Palazuelos, Rafael Fernández

PERI Working Papers

This article confirms that labor productivity in the European economies has continued to slow down in recent years. U.S. productivity growth has been higher than in the EU, but only since 2001. At the same time, both economies have modified previous employment performance: EU employment growth is now higher than in U.S. This article proposes that productivity growth be explained by demand dynamics, and investment in particular, not forgetting the influence of employment, along with other factors such as new technologies.


Climate Change And Damage From Extreme Weather Events, Robert Repetto, Robert Easton Jan 2009

Climate Change And Damage From Extreme Weather Events, Robert Repetto, Robert Easton

PERI Working Papers

The risks of extreme weather events are typically being estimated, by federal agencies and others, with historical frequency data assumed to reflect future probabilities. These estimates may not yet have adequately factored in the effects of past and future climate change, despite strong evidence of a changing climate. They have relied on historical data stretching back as far as fifty or a hundred years that may be increasingly unrepresentative of future conditions. Government and private organizations that use these risk assessments in designing programs and projects with long expected lifetimes may therefore be investing too little to make existing and ...


Did Retirees Save Enough To Compensate For The Increase In Individual Risk Exposure?, Christian E. Weller Jan 2009

Did Retirees Save Enough To Compensate For The Increase In Individual Risk Exposure?, Christian E. Weller

PERI Working Papers

The United States experienced an unprecedented financial crisis after 2007. This paper analyzes if retirees had enough wealth built up to weather the financial risks that materialized in the crisis. Financial risks associated with saving for retirement had increasingly shifted onto individuals away from the public and employers during the decades before the crisis. This growing personal responsibility should have gone along with more saving and less risk taking. I use data from the Federal Reserve’s triennial Survey of Consumer Finances to first define an income threshold for retirees, specifically whether annuity income is greater than twice the poverty ...


Partial Implementation Of Cool: Economic Effects In The U.S. Seafood Industry, Siny Joseph, Nathalie Lavoie, Julie A. Caswell Jan 2009

Partial Implementation Of Cool: Economic Effects In The U.S. Seafood Industry, Siny Joseph, Nathalie Lavoie, Julie A. Caswell

PERI Working Papers

Mandatory Country of Origin Labeling (MCOOL) was implemented on seafood in the United States on April 4, 2005. MCOOL exempts the foodservice sector and excludes processed seafood from labeling. This paper contributes to understanding the economics of the MCOOL law for seafood by showing that current partial implementation may have unintended consequences on the domestic supply chain. While labeling satisfies the market demand for information provision in one market, exemptions in the other market may create incentives for the diversion of imports, which are assumed to be lower in quality than domestic seafood, to the non-labeled sector. Analyzing alternate scenarios ...


Securing The Border From Invasives: Robust Inspections Under Severe Uncertainty, L. Joe Moffitt, John K. Stranlund, Craig D. Osteen Jan 2009

Securing The Border From Invasives: Robust Inspections Under Severe Uncertainty, L. Joe Moffitt, John K. Stranlund, Craig D. Osteen

PERI Working Papers

Two important features of agricultural quarantine inspections of shipping containers for invasive species at U.S. ports of entry are the general absence of economic considerations and the severe uncertainty that surrounds invasive species introductions. In this article, we propose and illustrate a method for determining an inspection monitoring protocol that addresses both issues. An inspection monitoring protocol is developed that is robust in maximizing the set of uncertain outcomes over which an economic performance criterion is achieved. The framework is applied to derive an alternative to Agricultural Quarantine Inspection (AQI) for shipments of fruits and vegetables as currently practiced ...


Comparing The Effectiveness Of Regulation And Pro-Social Emotions To Enhance Cooperation: Experimental Evidence From Fishing Communities In Colombia, Maria Claudia Lopez, James J. Murphy, John M. Spraggon, John K. Stranlund Jan 2009

Comparing The Effectiveness Of Regulation And Pro-Social Emotions To Enhance Cooperation: Experimental Evidence From Fishing Communities In Colombia, Maria Claudia Lopez, James J. Murphy, John M. Spraggon, John K. Stranlund

PERI Working Papers

This paper presents the results from a series of framed field experiments conducted in fishing communities off the Caribbean coast of Colombia. The goal is to investigate the relative effectiveness of exogenous regulatory pressure and pro-social emotions in promoting cooperative behavior in a public goods context. The random public revelation of an individual’s contribution and its consequences for the rest of the group leads to significantly higher public good contributions and social welfare than regulatory pressure, even under regulations that are designed to motivate fully efficient contributions.


A Safety Valve For Emissions Trading, John K. Stranlund Jan 2009

A Safety Valve For Emissions Trading, John K. Stranlund

PERI Working Papers

This paper considers the optimal design of an emissions trading program that includes a safety valve tax that allows pollution sources to escape the emissions cap imposed by the aggregate supply of emissions permits. I demonstrate that an optimal hybrid emissions trading/emissions tax policy involves a permit supply that is strictly less than under a pure emissions trading scheme and a safety valve tax that exceeds the optimal pure emissions tax as long as expected marginal damage is an increasing function. While the expected level of emissions under a hybrid policy may be more or less than under pure ...


Estimation Of Treatment Effect Of Asthma Case Management Using Propensity Score Methods, Sylvia Brandt, Sara Gale, Ira Tager Jan 2009

Estimation Of Treatment Effect Of Asthma Case Management Using Propensity Score Methods, Sylvia Brandt, Sara Gale, Ira Tager

PERI Working Papers

Asthma, treatment effect, health intervention, propensity scores


Setting An Agenda For Monetary Reform, Jane D’Arista Jan 2009

Setting An Agenda For Monetary Reform, Jane D’Arista

PERI Working Papers

The role played by monetary policy in creating the conditions that culminated in the current crisis and the failure of the Fed’s efforts to end the credit freeze in 2008 are critical components of the analysis needed as a backdrop for reform. This paper argues that the link between excess liquidity, the buildup in debt, the asset bubbles that debt created and the financial crisis that followed are outcomes of monetary as well as regulatory policy failures; that they reflect a substantial weakening in the Fed’s ability to implement countercyclical initiatives. It argues that the effectiveness of monetary ...