The New Deal and Modern Memory

The “Great Recession,” which began at year‐end 2007, was precipitated by plunging real estate values, followed by borrower defaults and financial crisis for the public and private institutions that supplied loanable funds to the mortgage market. With economic growth not yet returned to trend, three years on more than 9% of the American labor force remains unemployed. Current macroeconomic events, perhaps inevitably, have been compared to those of the Great Depression of 1929–1933, both in terms of severity and of the efficacy of the public policies adopted ostensibly to restore prosperity. In this article, I review the literature on the New Deal, paying particular attention to modern scholarship emphasizing the role of presidential politics and antibusiness political rhetoric in deepening and prolonging the Great Depression. The parallels between then and now suggest that the two economic contractions had similar causes and elicited equally counterproductive policy responses.     

Joint determination of biological encephalization,economic specialization

In this paper, we develop a paleoeconomic model of the co-evolution of economic specialization and encephalization—the common physiological measure of intelligence as reflected by brain mass relative to total body mass. Our economic analysis links ecological and social intelligence theories of increased encephalization in early hominins through a model in which both economic and ecological feedbacks jointly determined the evolutionary incentives. We focus on degrees of specialization affected by coordination costs with and without market exchange. Our results suggest encephalization would be a process characterized by diminishing returns to behavioral advances. In terms of the long-running debate in economics over whether specialization increases or decreases intelligence, our results suggest from an evolutionary perspective the answer depends on economic/social institutions and how these influence ecological interactions.     

Short and long-term interactions between venture capital returns and the macroeconomy: evidence for the United States

The main purpose of this paper is to empirically model the influence of macroeconomic and financial variables on the performance of risk capital in the US. We start our investigation using a static long-run equilibrium model. In contrast to previous studies, we analyze the effect of several factors simultaneously within the framework of a vector error correction model (VECM). This allows us to study short- and long-term interactions to overcome the problem of endogeneity, and to discover causal mechanisms. The results show that the value of venture capital investments is positively related to industrial production, the exit channel Nasdaq, and the long-term interest rate. However, the value of venture capital investments is negatively related to the short-term interest rate. According to the short-term dynamics, VEC Granger causality confirms that only industrial production influences venture capital performance, while venture capital returns Granger causes Nasdaq performance.     

The contribution of macroprudential policies to banks' resilience: Lessons from the systemic crises and the COVID-19 pandemic shock

This study examines the effectiveness of macroprudential policies in reducing the banks' risk during the COVID-19 pandemic and compares these results with the systemic banking crises years. Based on a sample of 624 banks across 40 countries during the period 2006–2020, we find that loosening capital-aimed macroprudential policies effectively reduced banks' risk during the COVID-19 pandemic, while this behavior led to increased risk during the systemic crises years. In contrast, tightening the remaining macroprudential policies during the systemic crises years and during the pandemic proved effective in reducing banks' risk. Furthermore, we show that the magnitude of the impact of macroprudential policies was stronger during the systemic crisis than that during the pandemic. Finally, we show that the results are driven by the capital requirement prudential policy, both during the systemic crisis and the COVID-19 pandemic, although the conservation buffer and the leverage limit also contributes to the ineffectiveness of these policies during the COVID-19 pandemic. The banks' leverage and loan growth also play an enhancing role of the effects of the macroprudential policies.     

The medical expense deduction and income levels: Progressive or regressive?

The medical expense deduction (MED) allows taxpayers to deduct from taxable income a proportion of their out-of-pocket medical insurance and health care expenses. Because the rate of subsidy is equal to the marginal tax rate previous studies have found MED to be a regressive tax mechanism biased toward benefiting higher-income taxpayers. The authors demonstrate, using GINI coefficients, that MED makes the tax structure more progressive than it would otherwise be and increases equality of after-tax incomes.