Working Papers

Financial crises are staggeringly costly. Only major wars rival them in the burdens they place on public finances.

The crisis of the export led model in the EMU countries and its monetary and financial consequences on European integration.

This paper describes the broad evolution of inequality in the world economy over the past four decades, and provides a summary account of the relationship between inequality, economic development, political regimes and the functional distribution of income.

This paper asks, how empirical evidence does or does not influence economic thinking and theory. In particular, which role do calibration, statistical inference, and structural change play?

The global financial crisis—and the Great Recession that followed—have inflicted tremendous economic and social damage across the world. Thankfully, we now appear to be on the path to recovery—though it remains sluggish and uneven, and in need of continued policy support in many advanced economies.

Human economic interactions spontaneously express themselves in the quantitative form of prices and transactions quantities. Thismakes it difficult to avoid quantitative reasoning in political-economic research altogether

Modern economics can benefit significantly both from a radical reorientation at the level of method, as well as from a greater input from appropriate branches of philosophy.

This paper, which is prepared for the Inagural Conference of the Institute for New Economic Thinking in King’s College, Cambridge, 8-11 April 2010, questions the preeminence of theory over empirics in economics and argues that empirical econometrics needs to be given a more important and independent role in economic analysis, not only to have some confidence in the soundness of our empirical inferences, but to uncover empirical regularities that can serve as a basis for new economic thinking.

The purpose of the paper is to argue for attention to be paid, not only to choice of theory, but also to choice of theoretical approach, in order to address issues posed by the crisis.

Since the outbreak of the Asian financial crisis more than a decade ago, world leaders have been searching for ways to make the global financial system more resilient, less crisis-prone, and better able to play its essential role in supporting broadly-shared growth.

As Carmen Reinhart and Kenneth Rogoff remind us in the title of their book, This Time is Different: Eight Centuries of Financial Folly, financial crises are nothing new (Reinhart and Rogoff (2009)). However, they often come as a surprise to many people because in most countries they appear only periodically.

The current debate on new Global Financial Architecture is, in a way, the continuation of the debate that was intensified consequent upon the Asian crisis.

Many people regard the recent financial crisis as a painful addition to an already massive body of evidence that demonstrates the inadequacy of today’s economic models of “rational” markets.

Eugene Fama, one of the founders of the so-called “Efficient Markets Hypothesis” (EMH), articulated early on the basic narrative that underpins it: “competition… among the many [rational] intelligent participants [would result in an] efficient market at any point in time [in which] the actual price of a security will be a good estimate of its intrinsic value” (Fama, 1965, p. 56).

The current economic and financial crisis, and it is both, has already imposed great costs on the global economy. Nor is there any guarantee that we have seen the worst and that recovery is now assured.