Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
- Published on Wednesday, March 19, 2014
This week's Worldly Philosopher, Raphaele Chappe, writes on the increasing inequality in free-market dynamics.
Inequality is rising in most developed economies. At the peak of the housing bubble in 2007, the richest 1% held 34.6% of wealth in the U.S.1 The drop in household wealth following the crisis affected the median household more than the top 1%2 so that the wealth distribution is now even more unequal. Robert Reich points out that since the start of the recession, the share of total U.S. national income going to labor has plunged (while profits in the U.S. corporate sector are now at a 45-year high), and that 2013 has been the year of "the great redistribution."3 In 2012, the top 10 percent of U.S. earners took more than half of total income – the highest level recorded in a century.4
Thomas Piketty's new book, "Capital in the Twenty-First Century" (Piketty, 2013)5 suggests that these trends are the natural result of free-market dynamics – with the prosperous decades that followed the Great Depression and World War II are an exception to the rule and are unlikely to be repeated. In the tradition of the worldly philosophers, this ambitious work is nothing short of an attempt to characterize the laws of motion for the process of capital accumulation and income distribution for advanced capitalist economies.
Piketty's hypothesis is that the main driver of inequality is the tendency of returns on capital6 to exceed the rate of economic growth (this is Piketty's key inequality relationship r>g), producing high capital/income ratios (β).7 If r is to remain at its historical rate of 4-5% p.a., while advanced economies continue to experience low growth rates8, we are headed back to the 19th Century in terms of inequality -- a time where inheritance was so important that it arguably made more sense for the ambitious and talented to marry well than to work hard.9
- Published on Wednesday, March 19, 2014
A recent study by SCEPA Faculty Fellow Willi Semmler and the Centre for European Economic Research's Frauke Schleer analyzes dynamics between economic downturns and financial stress for several euro-area countries.
Using a newly constructed financial condition index that includes banking variables, the authors examine leadership changes in countries that have high and low levels of financial stability and the ripple effects on the economy. They found that strong rippling effects appear to be related to large, but rare events, such as the financial crisis, and to a short business cycle. Prior to the financial crisis, economic shocks could be self-adjusting, even if the financial sector shock took place during a time of instability.
- Published on Tuesday, March 11, 2014
As countries continue to struggle with the consequences of the 2007-2008 recession, the debate surrounding national debt is at the forefront of economic and foreign policy discussions. What is too much debt? Does debt inhibit a state's ability to recover from the recession?
In a recent SCEPA Policy Note on the impact of national debt on economic growth, Economists Christian Proaño, Willi Semmler and Christian Schoder discovered that at low levels of financial stress, when investments in banks and stocks carry low risk and the financial market is stable, national debt does not impact economic growth. Rather, they found that debt impacts economic growth when there are high levels of risk and uncertainty in the financial sector. Therefore, economic growth depends first on financial market stability, and is only affected by debt if financial markets are unstable. These findings contradict the highly cited 2010 Reinhart and Rogoff study - now identified as having coding errors - which posited that despite all other factors, economic growth will decline if debt is 90% of a state's GDP.