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Testimony before the Joint Economic Committee: Empowerment in the Workplace

Diana Furchtgott-Roth | June 18, 2014

Employment for women 16 years and older only reached December 2007 levels (68 million) in January of this year. The slow growth of the economy is reducing employment opportunities for men and women alike. In addition, women face particular barriers to employment in their role as secondary workers and as family caregivers. It is important to make sure that labor markets are flexible so that women can have the choice of jobs that they want.

Income Inequality in America: Fact and Fiction

e21 | June 4, 2014

The presence of—and, in some countries, increase in—household income inequality has become a flash point in public policy and political discussion. 

For Winston Churchill, such inequality was an unavoidable part of economic life in capitalist societies. “The main vice of capitalism,” remarked the British Prime Minister, “is the uneven distribution of prosperity. The main vice of socialism is the even distribution of misery.”

But for President Barack Obama, income equality is not only a pressing problem, it is "the defining challenge of our time." Against this backdrop, e21 brought together leading economists to provide a primer on ways to think about income inequality. 

The Financial Times Is Blowing Piketty's Data Issues Out Of Proportion, Part One

Scott Winship | May 28, 2014

This article originally appeared in Forbes on May 28, 2014.

On Friday, the Financial Times published allegations by its economics editor Chris Giles that Thomas Piketty’s wealth inequality data in his heralded Capital in the Twenty-First Century gives a suspiciously skewed impression of trends and cross-national rankings. I will confess that I clicked on the link full of schadenfreude; I believe that Piketty’s book is irresponsibly speculative, that his inequality estimates sometimes give the wrong impression, and that his policy preferences would prove harmful to the middle class and poor in the long run.

Is Inequality Growing Out of Control?

Scott Winship | April 24, 2014

Has income concentration soared in the United States in recent decades? To ask the question is to sound like some sort of inequality truther in today’s post-Occupy world. Many believe the evidence leaves no doubt that income concentration has increased dramatically. Thomas Piketty devotes most of Part Three of his celebrated Capital in the Twenty-First Century to an examination of the inequality trendlines he and others have produced over the past fifteen years.

Making Central Banks More Resistant to Political Pressures and Fads

Charles W. Calomiris | April 14, 2014

This paper was presented April 13, 2014 at the International Monetary Fund’s Spring 2014 Meetings, in the session entitled “Can or Should Central Banks Remain Fully Independent Despite a Wider Mandate and Considerable Fiscal Pressure?”

Over the first 100 years of Federal Reserve System history, the United States enjoyed both price stability and the absence of banking crises in only about a quarter of those years. Allan Meltzer’s (2003, 2009, 2010) three volume history of the Fed (and the voluminous literature on Fed history published before and since)[1] document that two main influences explain persistent Fed failure: politicization of Fed decisions (especially to elicit Fed assistance in accomplishing short-term fiscal or electoral objectives of the Administration), and model misspecification (reflecting the limits of Fed knowledge about the economy).

Has the Federal Reserve Learned to be an Effective Lender of Last Resort in its First One Hundred Years?

Michael D. Bordo | March 17, 2014


The Federal Reserve was established a century ago in large part to serve as a lender of last resort to allay the financial instability of the National banking era and especially to avoid panics like that of 1907. Other advanced countries had long established central banks and they, especially the Bank of England had learned to act as LLR by adopting Walter Bagehot’s rules. In simplest terms what is commonly known today as Bagehot’s Rule is to “Lend freely at a penalty rate”. To be more exact Bagehot had a number of strictures (Humphrey 1975, Bordo 1990);

Reforming the Rules That Govern the Fed

Charles W. Calomiris | March 17, 2014


The Fed has achieved both of its central objectives – price stability and financial stability – in only about a quarter of its years of operation. What reforms would be likely to improve that performance? This article focuses on two problems that have plagued the Fed throughout its history: adherence to bad ideas, especially to influence from intellectual fads in macroeconomics, which have produced major policy errors; and politicization of the Fed, which leads it to pursue objectives other than price stability and financial stability. Several reforms are proposed to the structure and governance of the Fed, and its policy mandates, which would promote greater diversity of thought and independence from political pressures, which in turn would insulate the Fed from political pressures and make its thinking less susceptible to intellectual fads.

The Relevance of Federal Reserve Surplus Capital for Current Policy

Marvin Goodfriend | March 17, 2014


Surplus capital is employed in commercial enterprises as a reserve for contingencies such as absorbing losses or meeting expenses and dividends when earnings are low. The Fed has employed its surplus capital in a similar manner. Prior to the 2007-09 credit turmoil, the most important contingencies were exchange rate revaluations of foreign-currency-denominated securities that the Fed held for its own account. Since these have been marked to market on a regular basis, an appreciation of the foreign exchange value of the dollar would reduce the dollar value of the Fed’s foreign-security holdings

Achieving Normalcy in Monetary Policy

Mickey D. Levy | March 17, 2014

Economic performance continues to improve and in most regards has moved close to normal, but the Federal Reserve’s monetary policy remains far from normal. As the Fed tapers its asset purchases, it relies on forward guidance as a vehicle for artificially suppressing real interest rates even though the economy is in its fifth consecutive year of expansion and unemployment is declining. 

Shifting Perspectives on the Dual Mandate

Peter Ireland | March 17, 2014

Historical Evolution

Via its 1977 Amendment to the Federal Reserve Act, the United States Congress instructs our nation’s central bank to conduct monetary policy “so as to promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates.” Although these are the words most often cited as the source of the “dual mandate” requiring Federal Reserve officials to focus on both unemployment and inflation when setting interest rates and regulating the money supply, Steelman (2011) traces all the way back to the Employment Act of 1946 the more general idea that US economic policies, including those of the Fed, ought to be directed towards achieving objectives for those two variables jointly.

Recent Monetary Policy and the Fiscal Theory of the Price Level

Bennett T. McCallum | March 17, 2014

The policy actions taken by the Federal Reserve over the past six years have left the United States in an unusual condition that has led some prominent economists to suggest that the messages provided by the “Fiscal Theory of the Price Level” (henceforth, FTPL) will be of crucial importance in the near future.  The most prominent of these writings, arguably, has been a major piece by Christopher Sims in the April 2013 issue of the American Economic Review.

Beyond the Spin: Why it’s Terrible News that the ACA Lowers Employment

Charles Blahous | March 3, 2014

On February 4, 2014, the Congressional Budget Office (CBO) released a report that instantly became a focus of intense controversy and competing political spin. The report found that the Affordable Care Act (ACA or “Obamacare”) would reduce US employment by the equivalent of 2 million full-time workers by 2017, 2.5 million by 2024.

CBO: The ACA is Driving Workers Out of the Workforce

Charles Blahous | February 5, 2014

For the past few years, a problematic phenomenon has troubled economists: US job growth has been anemic even as the unemployment rate has steadily dropped, mainly because large numbers of workers are dropping out of the workforce altogether.

The Collapse of the Great Gatsby Curve

Scott Winship, Donald Schneider | February 3, 2014


As expected, President Obama’s State of the Union address to the nation last week was suffused with the theme of opportunity. Over the past two years, the president has consistently tied the opportunities of poor and middle class Americans to rising income inequality, and Tuesday he stayed true to this narrative:

Testimony before the Committee on the Budget, U.S. House of Representatives, Washington, D.C. January 28, 2014

Scott Winship | January 28, 2014

Chairman Ryan, Ranking Member Van Hollen, and Members of the Committee, thank you for inviting me to appear today to discuss the central issues of poverty and opportunity in America. The fiftieth anniversary of Lyndon Johnson’s declaration of war on poverty provides an occasion to reflect on federal anti-poverty policy to date and policies to promote opportunity and to consider how to build on the progress we have made while improving on those features of policy that have not served us well.

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