Thomas Palley: Economics for Democratic and Open Societies

The euro zone (EZ) was created in January 1999. Its weak economic performance is significantly due to the euro’s neoliberal monetary architecture and the design of monetary policy. Those features undermine national political sovereignty and consign the EZ to severe economic under-performance, which in turn fosters political demands for exit from the euro. Escaping this [...]

A debate on negative interest rates. YES, Thomas Palley: “One can have too much of a good thing”. NO, Adam Posen: “Negative interest rates have proved useful”. READ IT HERE

Wednesday’s decision by the Federal Reserve to raise interest rates is unwelcome and unnecessary. As admitted in its statement, investment remains soft, growth is only moderate, and inflation expectations are little changed. Moreover, the economy confronts financial headwinds from the recent jump in long term interest rates and an even stronger dollar. The Federal Reserve seems [...]

Dear Secretary Clinton and President Obama: On April 20, 1653, Oliver Cromwell spoke these words to the Long Parliament: “You have sat here too long for any good you have been doing… Depart, I say, and let us have done with you. In the name of god, go.” Secretary Clinton, you are rightly being blamed for the electoral [...]

James Tobin was a leading - perhaps the leading - American neo-Keynesian macroeconomist in the era of Keynesian dominance after World War II that extended through to the early 1970s. Along with growth theorist Robert Solow and micro and trade theorist Paul Samuelson, the three substantially shaped what became known as the neoclassical synthesis which [...]

This paper explores lock-in and lock-out via economic policy. It argues policy decisions may near-irrevocably change the economy’s structure, thereby changing its performance. That causes changed economic outcomes concerning distribution of wealth, income and power, which in turn induces locked-in changes in political outcomes. That is a different way of thinking about policy compared to [...]

I received an e-mail from an undergraduate economics student who was curious about economic policy in Washington, DC. His question says a lot about the current state of affairs. Here it is with my reply. From: Xxxxxxx Xxxxxxx [mailto:[email protected]] Sent: Saturday, October 1, 2016 10:56 AM To: mail Subject: Question from an undergraduate Dear Dr. Palley, I am [...]

After more than 7 years of economic recovery, the Federal Reserve is positioning itself to tighten monetary policy by raising interest rates. In light of the wobbly reaction in financial markets, an important question that must be asked is whether raising interest rates is the right tool. It could well be that the world’s leading central [...]

NIRP is quickly becoming a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian economic logic that asserts interest rate adjustment can ensure full employment. That pre-Keynesian logic has been augmented by ZLB economics which [...]

In economic policy, timing isn’t everything, it’s the only thing. The euro zone crisis has been evolving for over seven years, making it difficult to time policy proposals. Now, the shock of Brexit has created a definitive political opportunity for reforming rather than patching the euro. With that in mind, I would like to revive [...]