New SCEPA Research

Aleksandr Gevorkyan, assistant professor of economics at St. John’s University and New School PhD graduate, and New School economics student Ingrid Harvold Kvangraven published an article in the Review of Development Economics, “Assessing Recent Determinants of Borrowing Costs in Sub-Saharan Africa.”

Screen Shot 2016 10 18 at 4.21.53 PMThe article describes how, over the past decade, Sub-Saharan African countries’ ability to draw on new debt in international capital markets has become a central characteristic of their development experience. Yet, the determinants of the borrowing costs are driven by external factors where investor perception plays a key role. This raises concerns over the sustainability of the current development model.

Unfortunately, there is little to be done in the short run. Dealing with Sub-Saharan countries’ recurring debt crises will require “tackling the debt problem at its root.” Since that includes their lack of a diversified economic structure and subsequent lack of competitiveness on the international market, that’s no small task.

The Advanced Research Collaborative (ARC) at CUNY's Graduate Center launched the Global Consumption and Income Project (GCIP) in conjuntion with SCEPA Economist Sanjay Reddy. The project is an online compilation of data describing income and consumption of more than 160 countries from 1960 to the present.

The project's unprecedented data on material living standards provides a resource for scholars, public policy analysts, activists, journalists and the general public. The data can be used for analyses of population living standards, poverty, inequality, and inclusivity of growth and development in individual countries, regions, and the world as a whole.

The datasets at the core of the project present estimates of monthly real consumption and income of various portions (or quantiles) of the population (a 'consumption/income profile') in comparable units for the vast majority of countries in the world (more than 160) for every year for more than half a century (1960-2015).

The project is led by Sanjay Reddy of The New School and former ARC Distinguished Visiting Fellow, Arjun Jayadev of The University of Massachusetts, Boston, and Azim Premji of The University Rahul Lahoti University of Goettingen. 

Capitalism: Competition, Conflict and Crisis” is a new book on modern capitalist economies by Anwar Shaikh, professor and chair of the economics department at The New School for Social Research.

Based on fifteen years of research, Shaikh documents how standard economic assumptions - perfect competition, perfect firms, perfect knowledge and rational expectations - don’t describe or reflect reality.

Instead, he does something new. He develops theory from real behavior and real competition. From this fresh and practical perspective, he redefines conventional economic ideas such as supply and demand, wage and profits, growth, unemployment, inflation, inequality, and the recurrence of economic crises to offer an alternative framework for understanding the economics of capitalism. Below is the video recording from his book launch. 

Shaikh is a professor of economics at the New School for Social for Social Research. He is an associate editor of the Cambridge Journal of Economics, and was a senior scholar and member of the Macro Modeling Team at the Levy Economics Institute of Bard College from 2000 to 2005. In 2014, he was awarded the NordSud International Prize for Literature and Science from Italy’s Fondazione Pescarabruzzo. His intellectual biography appears in the most recent edition of Eminent Economists II published by Cambridge University Press (2014), along with similar essays from thirty prominent economists including seven current Nobel Prize Laureates.

Lopamudra BanerjeeWho is more vulnerable to natural disasters?

At the November 11th economics seminar hosted by SCEPA and The New School’s Economics Department, New School Economics Professor Lopamudra Banerjee argued that a household’s location in the class structure of a social system is a more important indicator of its chance of experiencing physical exposure to an extreme phenomenon in the environmental system, like flood, than the household's geographic location in a region of hazards. 

Banerjee draws on extensive data on natural disasters in Bangladesh, Tanzania, Indonesia, and on her own field research, to better understand why only some households experience exposure to disaster events.

At first pass, the data suggest that exposure to natural disasters is a matter of randomness. Taken alone, a household’s level of education, volume of assets, or value of expenditures doesn’t correlate convincingly with its likelihood of experiencing disaster exposure.

Upon closer look, Banerjee finds that risk of exposure is best predicted by the “composition of capital” owned by a household, rather than its volume of capital, per se. And, it is this composition of capital (which takes into account both non-material embodied assets like the level of education of household members, and material physical assets used as means of production) which indicates the most likely class situation of the household in the social structure. The notion of class situation employed here is a particular reading of German sociologist Max Weber’s ([1922] 1978) original concept.

In terms of her empirical analysis of the patterns of disaster exposure in a population, Banerjee's results suggest that the most vulnerable group are what Weber called the “petty bourgeoisie,” property owners with relatively low income, assets, and education. While the more wealthy members of a population can afford to protect their possessions from natural disasters, and the more poor members have little to lose and the flexibility to relocate; the class of petty bourgeoisie might be less nimble to move away from harm's effect when a disaster event occurs in their region of location; and therefore, bear greater risk of exposure in the event of a disaster. They own just enough that they have something to lose and cannot move, but not enough to protect their property from natural disasters.

Banerjee’s research shows that the more wealthy and well-educated are not necessarily immune from natural disasters. Vulnerability is best understood as a function of the complex intersection of characteristics that determine social class.

*Note: Presentation slides reflect research in progress and are not for citation.

Economics Professors Mark Setterfield of The New School and Eduardo Bastian of the Federal University of Rio de Janeiro have a message for post-Keynesian economists: take inflation seriously.

Setterfield and Bastian presented their research, “A Simple Analytical Model of the Adverse Effects of Inflation,” at the November 3rd weekly seminar series hosted by SCEPA and The New School Economics Department.

To “poke post-Keynesians in the ribs” so they consider the downsides of higher inflation, Setterfield and Bastian developed a framework to show the negative effects of rapidly rising prices on economic growth. Drawing from conflicting-claims inflation theory and Kaleckian growth theory, their work shows how different “inflation regimes” arise, ranging from low and stable price increases to out of control hyperinflation. The conclusion was clear: if inflation takes off, it can be hard to control and have adverse effects for economic growth.

bookIn their book on Atlantic City’s casino industry, economists Ellen Mutari and Deborah Figart tell a familiar story: financialization and the push for profits have left workers with less pay and more stress.

On October 27th, Mutari and Figart presented their research in the seminar series hosted by SCEPA and The New School’s Department of Economics. Mutari and Figart both teach at Richard Stockton College, just outside of Atlantic City in New Jersey.

A combination of industrial research and in-depth interviews with current and former casino workers let Mutari and Figart paint a comprehensive picture of the modern gaming industry. In the early days, casinos provided good stable jobs to tens of thousands of people in Atlantic City. But recently, as casinos are increasingly owned by private equity firms and hedge funds, job quality has plummeted.

Mutari and Figart describe three dimensions for evaluating job quality: pay and benefits, ability to foster a sense of well-being, and the provision of dignity and meaning. Their interviews with casino workers revealed that all three have eroded. One particular trend is “de-skilling,” where jobs are routinized to make workers replaceable. Shuffling machines, for example, are displacing dealers, which was once a skilled occupation whose workers took pride in the finesse and showmanship their work required.

This is not just an expose of the casino industry, but a metaphor for the economy. The same trends that have devastated workers in Atlantic City are playing out in cities and towns across the country. When financial firms make bets on companies and workers’ livelihoods are left to chance, the economy itself becomes more and more like a casino.

World Bank logoThe World Bank announced with great fanfare that the number of people living in poverty has fallen by almost 500 million between 1980 and 2012. However, as reported in The Economist Magazine, SCEPA Economist Sanjay Reddy is concerned the Bank overestimates the reduction in global poverty - and ultimately the efforts needed to combat it - by using one dimensional measurements that cannot fully capture the breadth and depth of poverty.

The new estimates are based on an increase in the Bank's poverty line from $1.25 per day to $1.90 per day. In their paper, "$1.90 Per Day: What Does it Say," Reddy and co-author Rahul Lahoti are critical of the World Bank's threshold, stating that half the world's population is in countries where $1.90 today buys less than $1.25 did in 2005.

According to Reddy, using a "single source" to determine poverty is inadequate, lacking a "standard for identifying who is poor and who is not that is consistent and meaningful." Instead, he calls for the use of holistic measures that focus on "identifying the real requirements of human beings to attain income-dependent human capabilities."

Reddy's preferred measure, the Global Consumption and Income Project (GCIP), provides a comprehensive method to measure material well-being both within and across countries. Using this rubric, Reddy reports that - rather than decreasing - the absolute number of poor increased in 2012 when compared to 1980 or 1990 under different poverty lines.

Reconstructing Keynesian MacroeconomicsSCEPA Economist Willi Semmler published a new book, Reconstructing Keynesian Macroeconomics Volume 3, coauthored with Carl Chiarella from Australia's University of Technology and Peter Flaschel from Germany's Bielefeld University.

The final of a three volume series which reinterprets and restructures Keynesian macroeconomic thinking, the book focuses on the interaction between the real economy (where goods and services are exchanged) and the financial markets (where money is borrowed and lent). The authors provide a detailed investigation of the financial, goods, and labor markets and show how variations in one can be stabilized or amplified by changes in another. Using novel empirical methods to test their conclusions, the authors propose a framework for policymakers' use in the modern economy.

It is a fact that the "average" American is living longer. Unfortunately, it is also a fact that white women and men have longer life expectancies at birth than black women and men. However, in 1950, the United States could claim racial equity in one important respect – should they reach age 65, both black and white men could expect to live twelve additional years to age 77.

Sixty years later, this racial equity is now a racial gap. In 2010, white men at age 65 were projected to live almost 2 years longer than black men, while white women could expect to live one year longer than black women.


SCEPA's new Policy Note, "The Racial Longevity Gap Past Age 65: Implications for Raising the Retirement Age," documents this new racial gap in post-65 life expectancy. The research warns of the potential to disportionately burden black Americans under proposals to raise the retirement age and offers policy proposals to address the income gaps that decrease life expectancy. 

Teresa Ghilarducci and Joelle Saad-Lessler released a new working paper examining the decline in employers offering retirement plans. Workplace retirement plans - defined contribution (DC) and defined benefit (DB) - help workers save for retirement conveniently, consistently, and automatically. However, offer rates are steadily declining: between 2001 and 2012, the retirement plan offer rate dropped from 60% to 50%. The drop is driven by a decline in DC plans. Bargaining power matters, since both the length of time spent unemployed and union status significantly impact the likelihood of losing or retaining employer retirement plan offer rates. Therefore, efforts to increase retirement account offer rates must address the decline in workers' bargaining power and the changes in norms relating to benefits provision.