Dodd-Frank at Five: How Much Has Changed?

July 21, 2015 marks the fifth anniversary of the passage of Dodd-Frank, the main legislative response to the dangerous financial practices that led to the financial crisis of 2007-2008. In this report, Gerald Epstein and Juan Montecino survey the trends of the US financial system prior to and since the passage of Dodd-Frank. They show that the financial system has become more resilient in several ways, but that many trends have not changed—and there are new, worrying trends in financial markets and practices, in particular the expansion of the “shadow banking” system.

> Read the report, "Banking from Financial Crisis to Dodd-Frank: Five Years On, How Much Has Changed?"

Multiple Mandates for Central Banks

In this working paper published by the International Labour Office (ILO), PERI Co-Director Gerald Epstein argues that central banks should take an active role in helping developing countries create jobs, invest in productive activities, and meet the challenges of climate change. "It took the great financial crisis of 2007-2008 to shake up the 'Washington Consensus' and raise significant questions about [a single-minded focus on commodity inflation] as a central banking norm.... It is timely to assess the arguments for broader (or multiple) mandates for central banks, review old approaches and assess new ones for implementing development central banking."

> Read “Development Central Banking: A Review of Issues and Experiences

When the Poor Spend Like the Rich: Indian Household Expenditures on Services

Deepankar Basu and Debarshi Das study the steep increase in spending on services (education, healthcare, transportation, entertainment, personal services, and rent) among Indian households. They find that the spending patterns of poor households increasingly resemble those of the rich, even as income differentials persist. For a poor country like India, with widespread under-nutrition, this is unusual. It suggests that poorer households are possibly constrained into spending more on services such as medical visits or school tuition, even when they have inadequate food, due to larger structural changes beyond their control.

>>Read "Service Sector Growth in India: A View from Households"

Development Objectives and Macroeconomic Policy

Developing countries can take lessons from the ambiguous responses of rich countries to the financial crisis, writes PERI Co-Director Gerald Epstein. A positive lesson: Central banks can play a larger role in meeting the challenges of development if, like the Federal Reserve, they ignore the advice to pursue inflation targeting with one instrument. Relying on a diverse set of instruments is best. The negative lesson: Government and fiscal authorities must do their share to develop their economies. We should rethink the advocacy of “central bank independence.”

> Read “Achieving Coherence Between Macroeconomic and Development Objectives

Political Economy of Reforms in Post-Conflict and Fragile States

Twenty percent of Africa’s population lives in “fragile states”—vulnerable and unstable countries which lag behind in development. Poverty, inequality, and weak institutions are outcomes of fragility; they also undermine economic development. Policy making poses a greater challenge in these countries than in other developing states.

In collaboration with the African Development Bank, PERI organized a workshop in Senegal for senior government officials from over 10 African countries. The workshop offered a political economy perspective to institutional reforms required to build peace, alleviate fragility, and accelerate economic development.

> Read more about the workshop 

> Watch a two-part interview with Léonce Ndikumana about PERI’s recent work on policy reform in fragile states:

Part I: What are the challenges, and how can they be addressed?

Part II: Signs of progress

PERI Announces New Program on Gender and Care Work

We are pleased to announce that Nancy Folbre will be formally joining PERI as the Director of the PERI Program on Gender and Care Work. Folbre, Professor Emerita of Economics at UMass Amherst, is a former recipient of a MacArthur Fellowship, and the author of many books, including The Field Guide to the U.S. Economy and The Invisible Heart: Economics and Family Values. She also contributed weekly to The New York Times’ Economix blog from 2009 - 2014. Her research interests are in feminist theory and political economy, as well as care labor and other non-market work. 

>>Read our interview with Nancy Folbre about her new PERI program