Working Papers

We develop a novel stress-test framework to monitor systemic risk in financial systems. The modular structure of the framework allows to accommodate for a variety of shock scenarios, methods to estimate interbank exposures and mechanisms of distress propagation.

Innovation is essential to economic growth. However, it appears that the ways in which we pursue innovation policies have aggravated inequality. Inequality is an increasingly contentious political issue in both wealthy and emerging economies.

“Oh, the Chinese hate the Japanese and the Japanese hate the Chinese—to hate all but the right folks is an old established rule. The Koreans hate the Japanese and the Vietnamese hate the Chinese, and the North Koreans hate them all. Oh, the People hate the Communists and the Communists hate the People. The Nationalists hate the Communists and the Communists hate themselves. The Confucians hate the Buddhists and the Muslims hate them all. All of my folks hate all of your folks. But during National Brotherhood Week, be nice to people who are inferior to you. It’s only for a week, so have no fear—be grateful that it doesn’t last all year.”

This paper finds its origins in two important developments within mainstream economics since the financial crisis, both of which analyze the economy from the viewpoint of what Schumpeter (1954) referred to as the domain of “real” analysis of a modern market economy in contrast to “monetary” analysis.

Caring Economics is about a new way of thinking about human prosperity. In mainstream economics, prosperity is a matter of consumption, income and wealth. By contrast, Caring Economics conceives of prosperity in terms of deeper sources of durable human wellbeing.

The SSGAC is a research infrastructure designed to stimulate dialogue and cooperation between medical researchers and social scientists. The SSGAC facilitates collaborative research that seeks to identify associations between specific genetic markers (segments of DNA) and behavioral traits, such as preferences, personality and social-science outcomes.

Behavior genetics is the study of the relationship between genetic variation and psychological traits. Turkheimer (2000) proposed “Three Laws of Behavior Genetics” based on empirical regularities observed in studies of twins and other kinships. On the basis of molecular studies that have measured DNA variation directly, we propose a Fourth Law of Behavior Genetics: “A typical human behavioral trait is associated with very many genetic variants, each of which accounts for a very small percentage of the behavioral variability.”

Income and wealth inequality have been rising in the past three decades. Surprisingly, inequality has been largely ignored in the literature and practice of monetary policy. However, due to the crisis, this question has been gaining more attention.

Recent years have witnessed the flourishing of a body of economic literature concerned with the search for empirical evidence of a positive relation between political connections, economic rent and the value of firms. The present paper contributes to the strand of this literature that deals with the quantitative measurement of the value of the political connections of firms.

Regulation of financial services has been an unmitigated policy disaster.

This essay argues that the Achilles heel of the international monetary and financial system is that it amplifies the “excess financial elasticity” of domestic policy regimes, ie it exacerbates their inability to prevent the build-up of financial imbalances, or outsize financial cycles, that lead to serious financial crises and macroeconomic dislocations.

The logic of deep global capitalist crises needs to be incorporated centrally into an understanding of the changes in the within-country inequality levels. I present a theoretical framework that incorporates two levels of political economic processes. First,global capitalist crises lead to the creation of an institutional structure or a regime in the capitalist centers that influences inequality in these core countries and in the periphery. Second the class configuration in the non-core countries - a set of institutional arrangements that can be termed local political economy - also plays a key role in determining inequality outcomes.

The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of top incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent.

The global financial crisis led to widespread dislocation. Understanding the forces that led to such a crisis is no easy matter.