Macroeconomics

The firehose of affluent consumption continues to drive inflation, not the stimulus package

Ever since 2016, INET researchers confirmed the significance of economic issues in Trump’s ascendency.

The limitations of the benchmark E-DSGE framework and how these limitations restrict the ability of this framework to meaningfully capture the macroeconomics of the climate crisis.

Why the E-DSGE Framework Is Not Fit for Purpose and What to Do About It

The biggest factor in accounting for the strength in the economy is the continuing importance of the wealth effect in sustaining consumption by the affluent.

A major factor in the decline of inflation is the simple fact that America’s workers were, in general, unable to raise their nominal wages in line with the rise in the cost of living

The McKinsey report’s highlighting of an extremely high job vacancy ratio in recent years does not reflect the true state of the U.S. labor market.

In persisting with its high rates policy, the Fed is acting like James Dean in the famous “chicken run” auto race in Rebel Without a Cause.

In the global super election year of 2024, populists are threatening to experience a new upswing almost everywhere – whether in the USA, the EU or in East Germany. What makes so many citizens so dissatisfied? What could help win people back and restore their trust in liberal democracy?

How have the macroeconomic problems in the US blinded many participants and observers to the actual state of the American economy as the election approaches?

The current paper returns to the key questions of wages and incomes and how wealth effects cripple reliance on interest rates to control inflation.

Bernanke and Blanchard have made another failed attempt to salvage establishment macroeconomics after the massive onslaught of adverse inflationary circumstances with which it could evidently not contend.

How convincing is the model analysis by Bernanke and Blanchard? How empirically relevant are their mechanisms causing inflation – and how robust and plausible are their econometric findings?

Behind bogus promises of job creation and economic growth lies a dangerous agenda to shred social safety nets.

The discrepancy between technocratic rhetoric and economic facts is colossal.

It was a mistake to accept a ‘reference price’-determination process for basic commodities led by finance

The key issue is the regulation of the liquidity of all financial markets, and not just that of the banking system

It is not just all about banking system liquidity

Read in the context of his time, Bagehot’s book Lombard Street appears as an attempt above all to reveal the dynamic of globalization when global money was sterling.

Germany’s debt brake and EU fiscal rules will make it well neigh impossible for EU countries to fund the investments needed to decarbonize their economies.

The theoretical approaches to analyzing crises have behind them contrasting conceptions of the way the economy works

The impenetrability of this continuously expanding Ptolemaic New Keynesian paradigm is maddening

The re-emergence of inflation threw the ‘science of monetary policy’ off the rails. Do the new tweaks to the theory work?

What lessons need to be drawn on this anniversary?

ProMarket’s new “Addendum to Retraction,” written it appears in response to our recent INET post, doubles down on its critique of our piece which showed that it is feasible for increased output to lead to reduced welfare. The ProMarket addendum is notable for its economic errors.*

Economists had to distort economic theory to fashion their merger “efficiency” arguments

ProMarket and the Consumer Welfare Standard An output increase is not sufficient to increase welfare. Allocation—how goods are distributed—matters.

The monetary policies of major central banks in advanced economies have had negative consequences and thus need to be fixed

Monetary policy should be guided much more by financial sector developments and much less by near-term targets for inflation.

On the reflexive relationship between inflation and inflation narratives

The effect of monetary policy on the functional distribution of income

Central banks strongly favored rentier incomes in their reaction functions

The role of speculation in the crude oil market in the increase in the WTI crude oil price.

Were the sharp increases in prices during 2020-2022 due to fundamental shifts in supply and demand or are they attributable to excessive market speculation?

Inflation and corporate profits, a further discussion, responding to Servaas Storm

Inflation and corporate profits, a further discussion

Besides changes in institutions and social norms, other phenomena could explain a rise in the profit share.

To what extent is profit-led inflation compatible with what we know about the price-setting behavior of firms and income distribution?

Current tests for mergers are in practice deeply flawed.

Antitrust econometrics relies on often-implausible assumptions

A model that captures key vulnerabilities and structural weaknesses of developing countries’ trade and production structures.

A Balance-of-Payments Constrained Growth Perspective

Why the conventional tools of the Phillips Curve, NAIRU, potential output, and money-supply growth are useless

Why does the apparently prescient and correct “key currency” view remain an embattled minority view?

Things are going to break and central banks are going to have to respond, but the mental frame that most people will be using is not well suited for understanding how the world now works

A Bank for International Settlements study says 60+ trillion dollars of off-the-books currency swaps could be a profound, systematic risk. Robert Johnson joins Paul Jay on theAnalysis.news.

Setting the record straight and identifying less destructive pathways forward than round after round of interest rate increases.

A critical reappraisal of the case in favor of monetary tightening pressed by inflation hawks is overdue.

The Consumer Welfare Standard is severely limited or defective, preventing it from being an appropriate standard for modern antitrust.

Emerging out of the COVID lockdown, inflation in the U.S. and globally has risen to the highest levels in 40 years. On December 2-3, PERI will host a conference to explore the causes of this global inflation spike. Conference participants will also provide critical perspectives on the austerity macroeconomic policies being implemented globally to control inflation and will propose alternative policies capable of managing inflation without imposing austerity and rising mass unemployment.

A Novel Account of Inflation Forecasts

What Strategies can Break This Dependency?

In her new book, veteran Wall Street watcher and economist Nomi Prins warns that central bank strategies deployed since the financial crisis are destroying the real economy, worsening inequality, and creating societal chaos.

Why to Be Wary of Another Volcker-Type Monetary Tightening

Fears of ‘stagflation’ have come back to haunt macroeconomic policy makers all over the globe

Antitrust expert Hal Singer shows how big businesses in certain industries are taking advantage of inflation worries to jack up prices far beyond their cost increases, all the while raking in robber-baron profits.

Diamond-Dybvig-Bernanke is a flawed model of banking that has no room for a lender of last resort

In the papers of economist Charles Kindleberger, Perry Mehrling found notes on the paper that won Ben Bernanke his Nobel Prize.

In memory of Lance Taylor

Everyone at INET is saddened by the news that our colleague Lance Taylor passed away on Monday, August 15th, 2022. His loss leaves a giant hole in our hearts as well as in the field of economics. His talents and achievements were prodigious and we will miss his cheerful and inspiring presence. Words help little on such occasions, but we would like to extend our condolences to his wife Yvonne, and his children Signe and Ian.

The 5th UNCTAD YSI Summer School provides an opportunity to explore the Challenges and Opportunities of a New International Economic Order. The school will bring together UNCTAD experts, academics, diplomats, and young scholars from across the globe for lively and stimulating intellectual debates.

Central banks can encourage climate-friendly investments by offering financial institutions favorable haircuts on green collateral

Central banks can encourage climate-friendly investments by offering financial institutions favorable haircuts on green collateral

Stagnating real wages may have contributed to the slowdown of US productivity

A persistent regime of low wages may determine very negative long-term consequences on the economy.

Ratner and Sim’s “Who Killed the Phillips Curve – A Murder Mystery”

The depth of the U.S. securities market helps ensure dollar hegemony

James K. Galbraith responds on the U.S. dollar system

Evidence-based answers to the main (policy) questions concerning the return of high inflation

Are there alternative, less socially costly, ways to bring inflation down?

An obituary for Axel Leijunhufvud (Sept 6, 1933 - May 5, 2022)

The multipolar financial world is here. The United States can survive it – but only with major political and economic changes at home. It’s time to start thinking about what those need to be.

Contrary to the neoclassical loanable funds theory, historical bond yields show Keynes was right that “convictions” anchor long-term interest rates

Contrary to the neoclassical loanable funds theory, historical bond yields show Keynes was right that “convictions” anchor long-term interest rates

A comment on the Securities and Exchange Commission’s proposed rule “Share Repurchase Disclosure Modernization”

Business firms are not alone in making investments in the productive capabilities required to generate innovative goods and services. Household units and government agencies also make investments in productive capabilities upon which business firms rely for their own investment activities.

Economics Nobel Laureate Michael Spence discusses the profound changes that are rippling through the global economy as we emerge from the COVID recession, where economic growth will have to rely more on productivity gains instead of the incorporation of excess labor capacity and what this would mean for countries around the world.

An alternative to Dynamic Stochastic General Equilibrium (DSGE) models

How could the new SDR allocation help developing countries?

How could the new SDR allocation help developing countries?

VIDEO

The INET community mourns Harcourt’s passing

By helping abate the liquidity crisis, incidences of banks becoming insolvent are reduced, and hence moral hazard in its severest form is minimized.

By helping abate the liquidity crisis, incidences of banks becoming insolvent are reduced, and hence moral hazard in its severest form is minimized.

Economists Claudia Sahm, Servaas Storm, and Pia Malaney share their views on the problem that has everyone freaking out. Here’s what it all means for your pocketbook – and your democracy.

Governments and civil society organizations must work together with UNCTAD to provide developing countries the tools — and the transformed governance regimes — they need to “build back better” through these challenging and difficult times.

Swift reorganization or liquidation of insolvent businesses is the single best policy to deal with corporate debt booms.

Swift reorganization or liquidation of insolvent businesses is the single best policy to deal with corporate debt booms.

What does Biden’s economic policy mean for the future?

Evidence from Survey Data of Inflation Forecasts

Going Down the Rabbit Hole at Jackson Hole

Occasionally, financial speculation fastens onto transformational technologies that have the potential to create a genuinely new economy.

Where are the US and Europe now and where could they be going?

What That Means For Biden’s Inflation Policy Trilemma

Is Victorian writer Walter Bagehot, whose adage “lending freely against good collateral at a penalty rate” has been gospel for central bankers, still relevant in a post-Great Financial Crisis world?

Is Victorian writer Walter Bagehot, whose adage “lending freely against good collateral at a penalty rate” has been gospel for central bankers, still relevant in a post-Great Financial Crisis world?

Despite fear-mongering about the latest Consumer Price Index, unemployment remains elevated and stimulus is needed to prevent a collapse in demand

Despite fear-mongering about the latest Consumer Price Index, unemployment remains elevated and stimulus is needed to prevent a collapse in demand

Contrary to the New Keynesian paradigm, long-term unemployment can be reversed without a significant uptick in inflation

Contrary to the New Keynesian paradigm, long-term unemployment can be reversed without a significant uptick in inflation