"Getting Out of the Recession?"

Research Scholar Gennaro Zezza updates the Levy Institute’s previous Strategic Analysis (December 2009) and finds that the 2009 increase in public sector aggregate demand was a result of the fiscal stimulus, without which the recession would have been much deeper. He confirms that strong policy action is required to achieve full employment in the medium term, including a persistently high government deficit in the short term. This implies a growing public debt, which is sustainable as long as interest rates are kept at the current low level. The alternative is an ongoing unemployment rate above 10 percent that would represent a higher cost to future generations.

"Flow of Funds Figures Show the Largest Drop in Household Borrowing in the Last 40 Years"

The Federal Reserve's latest Flow of Funds figures reveal that household borrowing has fallen sharply lower, bringing about a reversal of the upward trend in household debt. According to the Levy Institute's macro model, a fall in borrowing has an immediate effect--accounting in this case for most of the 3 percent drop in private expenditure that occurred in the third quarter of 2008--as well as delayed effects; as a result, the decline in real GDP and accompanying rise in unemployment may be substantial in coming quarters. For further details on the Macro-Modeling Team's latest projections, see the December 2008 Strategic Analysis Prospects for the U.S. and the World: A Crisis That Conventional Remedies Cannot Resolve.

"Fiscal Policy and the Economics of Financial Balances"

This paper presents the main features of the macroeconomic model being used at The Levy Economics Institute of Bard College, which has proven to be a useful tool in tracking the current financial and economic crisis. We investigate the connections of the model to the "New Cambridge" approach, and discuss other recent approaches to the evolution of financial balances for all sectors of the economy. We will finally show the effects of fiscal policy in the model, and its implications for the proposed fiscal stimulus on the U.S. economy. We show that the New Cambridge hypothesis, which claimed that the private sector financial balance would be stable relative to income in the short run, does not hold for the short term in our model, but it does hold for the medium/long term. This implies that the major impact of the fiscal stimulus in the long run will be on the external imbalance, unless other measures are taken.

"Some Simple, Consistent Models of the Monetary Circuit"

We address the finance motive and the determination of profits in the Monetary Theory of Production associated with the Circuitist School. We show that the "profit paradox" puzzle addressed by many authors who adopt this approach can be solved by integrating a simple Circuit model with a consistent set of stock-flow accounts. We then discuss how to reconcile some crucial differences between the Circuit approach and other Keynesian and post-Keynesian models.

The Changing Public Role in Services to Agriculture: The Case of Information

The paper analyzes the changes that have taken place in the nature of agriculture information and their consequences on the public role of related public services with specific regard to process undergoing in the European Union. Increased interest in food quality and food safety issues in a global consumer driven society, together with major attention to environmental and ethical issues related to food production, enlarge both the object of agricultural information and the audience of stakeholders in the food chain and in the general public. Information policy with regard to a multifunctional approach to agriculture, can be finalized to correct three main sources of market failures as access to information, quality and adverse selection and externalities and provision of public goods. The privatization of agricultural research and extension, although useful from the point of view of economic efficiency, poses a number of threats to the development of knowledge for sustainable agriculture. If the public sector decides to move away from the delivering of services, public action can still be relevant in orienting, targeting, regulating and funding in win-win solutions where the advantages of public extension, as open access and evaluation of social priorities, join efficiency and market orientation of the private sector.information, public goods, food quality, externalities, public services, extension, Public Economics,

Some Simple, Consistent Models of the Monetary Circuit

We address the finance motive and the determination of profits in the Monetary Theory of Production associated with the Circuitist School. We show that the “profit paradox” puzzle addressed by many authors who adopt this approach can be solved by integrating a simple Circuit model with a consistent set of stock-flow accounts. We then discuss how to reconcile some crucial differences between the Circuit approach and other Keynesian and post-Keynesian models.endogenous money, monetary circuit, determination of profits

"DEBT AND LENDING: A CRI DE COEUR"

Many papers published by the Levy Institute during the last few years have emphasized that the U.S. economy has relied too much on the growth of lending to the private sector, most particularly to the personal sector, to offset the negative effect on aggregate demand of the growing current account deficit. Moreover, this growth in lending cannot continue indefinitely.

Achieving Accountable Care: Are We on the Right Path?

Based on the Commonwealth Fund Commission on a High Performance Health System's ten recommendations, highlights considerations for the Centers for Medicare and Medicaid Services in finalizing rules for the Shared Savings Program, slated to begin in 2012