External Financial Shocks in Developing Economies

One of the most significant results of the global financial crisis and Great Recession of 2007-09, was that, in general, developing countries survived the crisis with less damage than the advanced economies. Why did this occur? Hasan Cömert and Mehmet Selman Çolak argue that a main factor was that the developing countries, in general, experienced relatively moderate financial account shocks, both in terms of magnitude and duration, during the crisis. They discuss the reasons for this, and implications of this result for future economic prospects and policymaking.  
>> Read “Can Financial Stability be Maintained in Developing Countries After the Global Crisis?: The Role of External Financial Shocks”

Gerald Epstein's Distinguished Faculty Lecture

On Tuesday, March 24, Professor Gerald A. Epstein, Co-Director of PERI, presented "When Big is Too Big: Do the Financial System's Social Benefits Justify Its Size?"

According to standard economic theory, the financial system encourages productive investment while also helping families and businesses to reduce risk and pursue opportunities that would otherwise be beyond their means. The Great Financial Crisis of 2008, however, brought these assumptions into doubt and raised a key question: just what are the financial sector's contributions to society? Professor Epstein will argue that since 1980 the financial sector has increasingly failed to promote social well-being, and he will propose some corrective restructurings.

At the conclusion of the lecture, Professor Epstein was presented with the Chancellor's Medal, the highest honor bestowed to faculty by the campus.

>>Read more information about the event

Impact of Food Insecurity on the Elderly

Food insecurity has been on the rise in the U.S., while social safety net programs have been targeted for cuts. Peter Arno, Kenneth Knapp, Stephen Russo and Deborah Viola assess the prevalence and impact of food insecurity in a survey of 500 elderly homebound meal clients in New York City. Their findings suggest that community-dwelling, homebound seniors have serious medical and health problems, multiple unmet social service needs, and often suffer from food insecurity. Understanding the relationship between these factors will help community organizations and government agencies assure the well-being of the elderly.

>> Read Rising Food Insecurity and Conservative Policy in the U.S.: Impact on the Elderly

Financialization and Speculative Commodity Price Movements

After declining for almost three decades, the food price index of the Food and Agricultural Organization rose by 96 percent between 2000 and 2008. This massive spike in food prices contributed to a worldwide rise in malnutrition and food insecurity. Manisha Pradhananga considers a range of factors in seeking to explain this price spike. She finds that a substantial part of the explanation is tied to the concurrent rise in speculative trading of a wide range of commodities on financial markets, including energy, metals as well as agricultural commodities. Increasing food price stability on a global scale will therefore require financial regulations that limit speculative financial trading within global commodity markets.

>>Read Financialization and the Rise in Comovement of Commodity Prices

>>Read an interview with paper author Manisha Pradhananga about her research

Does the Earned Income Tax Credit Improve Health?

Poverty and health have a well-established relationship: lower socioeconomic status leads to worse health outcomes. Yet research has rarely tested the effectiveness of anti-poverty programs at improving health. In this paper, Jeannette Wicks-Lim and Peter Arno examine the health effects of the Earned Income Tax Credit (EITC), the largest anti-poverty program for working families operating throughout the U.S. The authors find that New York’s EITC program reduced the low birth weight rate in poor neighborhoods, an important health indicator. The study is the first to analyze EITC’s impact on neighborhoods, rather than households, and finds a concentrated health benefit in high poverty areas.

>> Read "Improving Population Health by Reducing Poverty: New York’s Earned Income Tax Credit"

A $15 U.S. Minimum Wage Without Job Losses Can Work

Pollin and Wicks-Lim examine whether U.S. fast-food businesses could adjust to an increase in the federal minimum wage from its current level of $7.25 per hour to $15 an hour without having to lay off workers.  They show how, through a four-year phase-in process, the fast-food industry could adjust to a $15 minimum wage without resorting to any layoffs or even cuts in profitability.  Rather, the fast-food industry could fully absorb the cost increases generated by a $15 minimum wage over the four-year period through a combination of turnover reductions along with modest increases in both sales growth and prices.

>>Read "A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs"