Causes of the 1980s Slump in Europe

macroeconomics, slump, unemployment, Europe, EEC, macroeconomic theory

The political economy of the Jospin government

This article explores the political economy of the French Socialist Party (PS), beginning with the neo-liberal U-turn of 1983. It then charts the re-evaluation of the PS's political economic foundations after the 1993 defeat, the rejection of the neo-liberal 'pensée unique', and the rehabilitation of a broadly Keynesian frame of reference. The article goes on to explore how this shift has fed through into the Jospin government's policy and positions at both the national and international level. It explores aspirations to reinvent the EU as a Keynesian social democratic 'policy space', and at the national level, employment, macroeconomic, and structural policies

The Crisis of Finance-Dominated Capitalism in the Euro Area, Deficiencies in the Economic Policy Architecture, and Deflationary Stagnation Policies

* For a more detailed elaboration on the macroeconomic theory of finance-dominated capitalism, see the respective chapters in my book The Macroeconomics of Finance-dominated Capitalism – and Its Crisis (Hein 2012a). The present paper is based on this theory, and it extends and updates the analysis of the euro crisis I have presented in Hein (2012b). I would like to thank Achim Truger for his helpful comments and Matthias Mundt for his valuable research assistance. The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad

Macroeconomic Fluctuations, Inequality, and Human Development

This paper examines the two-way relationship between inequality and economic fluctuations, and the implications for human development. For years, the dominant paradigm in macroeconomics, which assumed that income distribution did not matter, at least for macroeconomic behavior, ignored inequality--both its role in causing crises and the effect of fluctuations in general, and crises in particular, on inequality. But the most recent financial crisis has shown the errors in this thinking, and these views are finally beginning to be questioned. Economists who had looked at the average equity of a homeowner--ignoring the distribution--felt comfortable that the economy could easily withstand a large fall in housing prices. When such a fall occurred, however, it had disastrous effects, because a large fraction of homeowners owed more on their homes than the value of the home, leading to waves of foreclosure and economic stress. Policy-makers and economists alike have begun to take note: inequality can contribute to volatility and the creation of crises, and volatility can contribute to inequality. Here, we explore the variety of channels through which inequality affects fluctuations and fluctuations affect inequality, and explore how some of the changes in our economy may have contributed to increased inequality and volatility both directly and indirectly. After describing the two-way relationship, the paper discusses hysteresis--the fact that the consequences of an economic downturn can be long-lived. Then, it examines how policy can either mitigate or exacerbate the inequality consequences of economic downturns, and shows how well-intentioned policies can sometimes be counterproductive. Finally, it links these issues to human development, especially in developing countries

A Critical Examination of the X-Wind Model for Chondrule and Calcium-rich, Aluminum-rich Inclusion Formation and Radionuclide Production

Meteoritic data, especially regarding chondrules and calcium-rich, aluminum-rich inclusions (CAIs), and isotopic evidence for short-lived radionuclides (SLRs) in the solar nebula, potentially can constrain how planetary systems form. Intepretation of these data demands an astrophysical model, and the "X-wind" model of Shu et al. (1996) and collaborators has been advanced to explain the origin of chondrules, CAIs and SLRs. It posits that chondrules and CAIs were thermally processed < 0.1 AU from the protostar, then flung by a magnetocentrifugal outflow to the 2-3 AU region to be incorporated into chondrites. Here we critically examine key assumptions and predictions of the X-wind model. We find a number of internal inconsistencies: theory and observation show no solid material exists at 0.1 AU; particles at 0.1 AU cannot escape being accreted into the star; particles at 0.1 AU will collide at speeds high enough to destroy them; thermal sputtering will prevent growth of particles; and launching of particles in magnetocentrifugal outflows is not modeled, and may not be possible. We also identify a number of incorrect predictions of the X-wind model: the oxygen fugacity where CAIs form is orders of magnitude too oxidizing; chondrule cooling rates are orders of magnitude lower than those experienced by barred olivine chondrules; chondrule-matrix complementarity is not predicted; and the SLRs are not produced in their observed proportions. We conclude that the X-wind model is not relevant to chondrule and CAI formation and SLR production. We discuss more plausible models for chondrule and CAI formation and SLR production.Comment: Accepted for publication in The Astrophysical Journa