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GDAE Sponsors Conference on Macroeconomics

From June 20-23, 2002, about 20 innovative thinkers came together to discuss new directions for macroeconomic theory and policy at the conference, "Rethinking Macroeconomics," held at the Pocantico Conference Center of the Rockefeller Brothers Fund. The conference was the first step toward the creation of a new, college-level, introductory macroeconomics textbook, Macroeconomics in Context, which is the companion to the Institute’s Microeconomics in Context. These texts develop the contextual economics approach, which analyzes economic issues within the physical contexts of environment and technology, and the social/psychological contexts of human motivations, culture, social norms, history, politics, and institutions.

The papers presented at the Rethinking Macroeconomics conference are available in New Thinking in Macroeconomics (Edward Elgar, 2004). This book can be used in a variety of courses, where it can illustrate the lessons for macroeconomic theory from important issues including international capital flows, the role of the Federal Reserve Board in the U.S., the European welfare state model, the housing market and homelessness, as well as tensions between environmental constraints and macroeconomic growth.
Conference participants: (standing, from left to right) Nahid Aslanbeigui, Brian Roach, Julie Nelson, Frank Ackerman, Michele Naples, Peter Dorman, Doreen Isenberg, Tom Weisskopf, Jonathan Harris, David Ellerman, Steve Cohn, Randall Wray, (seated, from left to right) Bruce Mazlish, Hugh Stretton, Neva Goodwin, Anne Mayhew. Missing from the photo are David Howell and Lance Taylor.

The topics discussed by conference participants included:

  • Globalization and International Macroeconomic Relations. Papers by Paul Streeten, Nahid Aslanbegui, and Michelle Naples addressed the altered nature of macroeconomic policy in a globalized world. Streeten emphasized the lack of effective institutional structures to manage global financial flows, and the uneven benefits and costs of globalization. Aslanbeigui and Naples addressed issues of instability and crisis in the global economy, and reviewed the historical basis for policy paradigms that provide macroeconomic stability.

  • National Institutions and Policies. Lance Taylor discussed the role of debt and deficits in U.S. macroeconomic policy, emphasizing the unsustainability of continuing large foreign deficits. David Ellerman, presenting a paper written jointly with Joseph Stiglitz, criticized the “shock therapy” approach for economic transition in Russia and Eastern Europe, and proposed more sustainable institutional reform and restructuring. Anne Mayhew focused on monetary policy, comparing different analyses of the potential and limits of monetary policy for macroeconomic stabilization.

  • Employment, Distribution and Equity. David Howell examined the sources of income inequality and unemployment, criticizing the commonly held view that labor market institutions which protect workers also contribute to higher unemployment, and citing extensive European and U.S. data to show that effective worker protection, low inequality, and low unemployment are not incompatible. Randall Wray reviewed the impacts of U.S. macroeconomic expansion on employment, arguing that many low-income workers are left behind even by apparently robust expansions. Doreen Isenberg explored the connections between macroeconomic policies and housing markets, suggesting that financial globalization has undermined policies promoting affordable housing.

  • Macroeconomic Growth and the Environment. Peter Dorman presented an analysis of the relationship between developing country debt and deforestation, supporting the thesis that more highly indebted countries tend to suffer higher rates of forest loss. Neva Goodwin and Jonathan Harris posed the question of whether macroeconomic growth is compatible with environmental sustainability, citing evidence on energy use, transportation, and agriculture to indicate the pressures of rising per capita consumption on the environment

Conference Presenters and Paper Topics:

Paul Streeten, Professor Emeritus, Boston University, former Special Adviser to the World Bank – "Paradoxes of Globalization"

Nahid Aslanbeigui, Professor of Economics, Monmouth University – "Global System Instability"

Michelle Naples, Associate Professor, College of New Jersey – "International Institutional Framework"

Lance Taylor, Arnhold Professor of International Cooperation and Development, New School University – "U.S. Sectoral Macroeconomics"

David Ellerman, former Economic Adviser to the Chief Economist of the World Bank, and Joseph Stiglitz, former Chief Economist of the World Bank – "Institutional Reform in Transitional Economies"

Anne Mayhew, Vice Provost for Academic Affairs and Dean of Graduate Studies, University of Tennessee – "Evolution of Monetary Policy in the U.S"

David Howell, Professor at the Robert Milano Graduate School, New School University – "Earnings Inequality and Unemployment in the U.S. and Europe"

Randall Wray, Professor of Economics and Senior Research Associate, Center for Full Employment and Price Stability, University of Missouri, Kansas City – "Employment in the Clinton-era Expansion"

Doreen Isenberg, Professor of Economics, Drew University – "Financial Globalization and Housing Policy"

Peter Dorman, Evergreen State College, Olympia, Washington – "Developing Country Debt and Deforestation"

Jonathan Harris and Neva Goodwin, Global Development and Environment Institute, Tufts University – "Macroeconomic Growth and the Environment"

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