Working Paper Roundup 3/7/2014

Michael Stephens | March 7, 2014

Central Bank Independence: Myth and Misunderstanding
L. Randall Wray
“This paper argues that the Fed is not, and should not be, independent, at least in the sense in which that term is normally used.

Our understanding of policy, of the policy space available to the sovereign, and of the operational realities of fiscal and monetary policy would be improved if we abandoned the myth of central bank independence.”

Changes in Global Trade Patterns and Women’s Employment in Manufacturing: An Analysis over the Period of Asianization and Deindustrialization
Burca Kizilirmak, Emel Memis, Şirin Saraçoğlu, and Ebru Voyvoda
“We provide estimates for total and women’s employment effects of world trade, evaluating the changes in trade flows in 30 countries (21 OECD and 9 non-OECD countries) for 23 manufacturing sectors by breaking up the sources of these changes between the trade with the North, the South, and China. …
Our results present a net negative impact of trade on total employment as well as on women’s employment in 30 countries over the period of analysis [1995-2006]. … Country level results show that the United States has by far the largest estimated employment losses from the change in structure of trade: 81 percent of the employment losses in the North originate in the US”

Full Employment: The Road Not Taken
Pavlina R. Tcherneva
“It is common knowledge that Keynesian stimuli are frequent policy tools to deal with recessions and unemployment; what is not commonly known is that modern ‘Keynesian policies’ bear little, if any, resemblance to the policy measures Keynes himself believed would guarantee true full employment over the long run.”

From the State Theory of Money to Modern Money Theory: An Alternative to Economic Orthodoxy
L. Randall Wray
“This paper explores the intellectual history of the state, or chartalist, approach to money, from the early developers (Georg Friedrich Knapp and A. Mitchell Innes) through Joseph Schumpeter, John Maynard Keynes, and Abba Lerner, and on to modern exponents Hyman Minsky, Charles Goodhart, and Geoffrey Ingham. This literature became the foundation for Modern Money Theory (MMT).”

Modern Money Theory and Interrelations between the Treasury and the Central Bank: The Case of the United States
Éric Tymoigne
“[T]here is nothing written in stone in terms of fiscal operations. If tomorrow nobody is willing to take treasuries, the Treasury, with or without the help of the Federal Reserve, has the means to bypass that problem if it chooses to use them; it becomes a political issue rather than an economic one. The theoretical implication that MMT draws from this is that one can simplify the economic analysis without a loss of generality by assuming that the Federal Reserve directly funds the Treasury.”

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