Considerations on Interest Rate Exogeneity

The idea of an exogenous money supply—controlled entirely through centralbank interventions—was a fundamental tenet of monetarism and New Classical economics. Post Keynesians have developed an extensive literature arguing that the money supply is in fact endogenous—that market forces combine with central banks in establishing the money supply.But Post Keynesians disagree on a related question: to what extent are interest rates set exogenously by central banks? To address this issue, this paper presents evidence regarding the movement of market interest rates in U.S. financial markets relative to the Federal Reserve-controlled Federal Funds rate. Concluding that market interest rates are primarily set through market forces—i.e. are largely endogenous—the paper then discusses the primary source of interest rate endogeneity. This is the instability of deregulated financial markets, which leads market participants to make wide swings in their risk assessments over time. It follows that effective regulatory policies to stabilize markets and control interest rates directly will increase the degree of interest rate exogeneity. The paper concludes with proposals for establishing greater control over market interest rates.

Targeting Employment Expansion, Economic Growth and Development in Sub-Saharan Africa: Outlines of an Alternative Economic Programme for the Region

This paper outlines the elements of a development-targeted economic framework aimed at creating decent employment opportunities as a strategy for realizing core human development goals in Africa. Four policy areas form the core of the paper: monetary policy and inflation, exchange rate policy, development finance and financial sector reforms, and public investment and fiscal policy. This paper draws heavily on three large UNDP-sponsored studies of employment-oriented economic policies in Kenya, Ghana, and South Africa. The paper aims to discuss the elements of an alternative, development-targeted economic framework for African countries in general and, in doing so, the analysis draws on examples, research, and statistics from a wide range of countries.Africa, macroeconomics, employment, finance, exchange rates, inflation.

Is Full Employment Possible Under Globalization? (revised)

To honor the life work of Professor Sumner Rosen, this lecture examines approaches to promoting full employment at decent jobs within our contemporary era of globalization. The lecture briefly summarizes the theories of unemployment of Marx, Friedman, Keynes and Kalecki. It then addresses the meaning of full employment within the alternative theories and under different historical and country settings. It next considers the issue of the inflation/unemployment trade-off, and the Meidner-Rehn Swedish approach to inflation control under full employment. It concludes by presenting a sketch of something approximating a full employment program for the contemporary U.S. economy, focusing on ending the Iraq war and reallocation public spending toward health care, education, and green growth.�full employment, globalization, theories of unemployment, inflation

Financial Structures and Egalitarian Economic Policy

Written in 1995 and published in the New Left Review, this Working Paper remains highly relevant to the current financial crisis. Pollin grapples with how we can maintain the pursuit of egalitarianism in the context of globalization. He considers how we may harness financial institutions and activities to promote renewed egalitarian policy, by bringing dramatic increases in the democratic control over financial markets and the allocation of credit. He proposes ways to do so without sacrificing the basic sources of micro efficiency and macro coordination and stability that are necessary for any viable economic strategy.

Response to “Seven Myths about Green Jobs” and “Green Jobs Myths”

In this working paper, Robert Pollin responds to critics who purport to debunk “myths” about recent studies on the employment effects of investments in the clean energy economy. These papers are written as a response to what they term the “rapidly gaining popularity” of four studies that attempt to show the employment gains that can emerge from investments in building a clean energy economy in the United States, including Green Recovery, co-published by the Center for American Progress and PERI. Overall, these papers offer no challenge to the central explanations as to how investing in the green economy will provide significant benefits throughout the U.S. economy.