News

December 7, 2010

Three UMass Economists Selected for INET Inaugural Grants Program

For its Inaugural Grants Program, the Institute for New Economic Thinking (INET) has selected 27 projects to address many of the most challenging issues facing economics today. Two are spearheaded by UMass economists: Arindrajit Dube (with Ethan Kaplan from Columbia and Stockholm University) in the area of macroeconomics and finance for A Spatial Approach to Macroeconomic Inference; and Gerald Epstein and James Crotty in the area of economic history and political economy for How Big is Too Big? What Should Finance Do and How Much Should It Be Cut Down to Size? The INET selected grantees from more than 500 proposals from 11 countries. Of the total target grant amount of about $3.8 million for all grantees, the UMass economists will receive nearly $450,000. 

Economist Arindrajit Dube, who joined the UMass economics faculty in 2010 and is an associate with the Political Economy Research Institute (PERI), is also a research fellow at IZA, a private, independent economic research institute that focuses on the analysis of global labor market developments. With a Ph.D. from the University of Chicago in 2003, he was a postdoctoral fellow at the Institute of Industrial Relations at Berkeley from 2003-05. Dube's current work is concerned with the effects of fiscal stimulus, the impact of minimum wage on labor market flows, the impact of labor relations in hospitals on patient health outcomes, and the effects of employer mandates on health benefits. His recent publications include, with T. William Lester and Michael Reich, "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties" (Review of Economics and Statistics, November 2010) and, with Ethan Kaplan and Suresh Naidu, "Coups, Corporations and Classified Information"(Quarterly Journal of Economics, forthcoming).

Professor Gerald Epstein is chair of the Department of Economics and founding co-director of PERI. He received his Ph.D. from Princeton University in 1981. Epstein has written articles on numerous topics including financial regulation, alternative approaches to central banking for employment generation and poverty reduction, and capital account management and capital flows. He has worked with numerous UN organizations, including the United Nations Development Program and the International Labor Organization on macroeconomic policy and human development impact assessments of trade policies; and UN-DESA on developing alternatives to inflation targeting monetary policy. Most recently Epstein’s research has focused on the impacts of financialization (Gerald Epstein, ed. Financialization and the World Economy, Elgar Press, 2005) and alternatives to inflation targeting (Gerald Epstein and Erinc Yeldan, eds. Beyond Inflation Targeting: Assessing the Impacts and Policy Alternatives, Elgar Press, 2009).

Professor Emeritus and Sheridan Scholar James Crotty received his Ph.D. from Carnegie-Mellon University in 1973 and retired from UMass Amherst in 2007 after 33 years of service. However, as Sheridan Scholar, he continues to teach a graduate-level macroeconomics course. Crotty is internationally recognized for his work in domestic and international macroeconomic theory and policy. Over the years he has developed a highly sophisticated and rich analysis of macroeconomic outcomes based on an innovative blending of key insights of three giants of economic thought: Karl Marx, John Maynard Keynes, and Joseph Schumpeter. By integrating aspects of their ideas, and adding many important innovations of his own, Crotty has produced a large amount of important research on theoretical, empirical and policy-oriented topics in the broad areas of macroeconomics and finance. He has published over fifty academic articles and book chapters as well as numerous pieces for popular magazines.

Launched in October 2009 with a $50 million commitment from George Soros and driven by the global financial crisis, INET is dedicated to empowering and supporting the next generation of economists and scholars in related fields. The organization is dedicated to broadening and accelerating innovative thinking that can lead to insights into and solutions for the great challenges of the 21st century, thereby bringing economics back to its core mission of guiding and protecting society.  Click here for more information about INET.

Abstracts of the UMass Amherst projects selected to receive INET funding

Arindrajit Dube
Ethan Kaplan, Columbia University
A Spatial Approach to Macroeconomic Inference
$225,464 over two years.
Many of the most important questions in contemporary macroeconomics have proven elusive and thus have yet to be answered in a convincing way. This is in part due to heavy reliance by empirical macroeconomists on time series variation of economic aggregates to find answers. The project will be conducted through three separate research projects with a common methodological approach using spatial cross-sectional variation in addition to time series variation to identify effects. The projects will focus on: 1) estimating fiscal multipliers; 2) estimating the impact of anti-predatory lending laws on housing prices, default rates and foreclosures; and 3) estimating the impact of raising wages during recessions. The end product will make both methodological and substantive contributions to modern macroeconomics.

Gerald Epstein
James Crotty
How Big is Too Big? What Should Finance Do and How Much Should It Be Cut Down to Size?
$207,480 over three years
The financial sector has grown significantly over the last several decades, and some have suggested that it is now too big. Yet we have no obvious theoretical framework nor clear metric to measure the social usefulness of financial activities to help us determine the desirable size of the financial sector. Building on James Tobin’s concept of “functional efficiency,” this project will develop new micro and macro data sets to: 1) estimate the size of “functionally inefficient” financial activity, and 2) estimate the share of financial innovations that are “socially inefficient.” Then, these data sets will be utilized to study the impacts of financial regulations, financial taxes and other safety enhancing financial measures that affect the level of “functionally efficient” finance.  Finally, we will study the impact of financial size on political capture, and then add those impacts to the study of the socially desirable size and character of the financial system.