Publishing Institution: Institute for New Economic Thinking (INET) / Publication Year: within 5 Years

Author:: Òscar Jordà, Martin Kornejew, Moritz Schularick, and Alan M. Taylor
Publication Date:: 10-2021
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: What are the macroeconomic consequences of business credit booms? Are they as dangerous as household credit booms? If not, why not? We answer these questions by collecting data on non-financial business liabilities (primarily bank loans and corporate bonds) for 17 advanced economies over the past 150 years. Unlike household credit, business credit booms are rarely followed by macroeconomic hangovers. Data on debt renegotiation costs—instrumented by a country’s legal tradition—show that frictions to debt resolution make recessions deeper and longer—an important factor in explaining the differences with household credit booms.
Topic:: Debt, Economics, International Political Economy, Global Recession, Macroeconomics, Credit, and Corporations
Political Geography:: Global Focus

Author:: Jakob Vestergaard and Daniela Gabor
Publication Date:: 12-2021
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Despite much attention to unconventional monetary policies after the financial crisis, the collateral policies of central banks are rarely discussed. And when they are, the haircuts applied to assets pledged to access central bank liquidity tend not to be analyzed. An exception to these trends is the recent work by Nyborg (2017), who argues that the collateral policies adopted by the European Central Bank (ECB) aggravated the sovereign debt crisis and put the survival of the euro at risk. Taking our point of departure in the money view literature (Mehrling 2011), we argue however that Nyborg’s critique of the ECB’s crisis response is misguided and that his proposal to deepen and reinforce the ECB’s role in the fiscal disciplining of member states would be procyclical and destabilizing. Through our analysis of Nyborg’s work and the ECBs crisis response, we identify core principles for countercyclical collateral policies suitable for market-based financial systems.
Topic:: International Political Economy, Global Markets, Central Bank, Macroeconomics, Money, Fiscal Policy, European Central Bank, and Banking
Political Geography:: Europe

Author:: Trevon Logan and Peter Temin
Publication Date:: 01-2020
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper records the path by which African Americans were transformed from enslaved persons in the American economy to partial participants in the progress of the economy. The path was not monotonic, and we organize our tale by periods in which inclusiveness rose and fell. The history we recount demonstrates the staying power of the myth of black inferiority held by a changing white majority as the economy expanded dramatically. Slavery was outlawed after the Civil War, and blacks began to participate in American politics en masse for the first time during Reconstruction. This process met with white resistance, and black inclusion in the growing economy fell as the Gilded Age followed and white political will for black political participation faded. The Second World War also was followed by prosperity in which blacks were included more fully into the white economy, but still not completely. The Civil Rights Movement proved no more durable than Reconstruction, and blacks lost ground as the 20th century ended in the growth of a New Gilded Age. Resources that could be used to improve the welfare of whites and blacks continue to be spent on the continued repressions of blacks.
Topic:: Economics, Race, History, Capitalism, and Slavery
Political Geography:: United States and Global Focus

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