Banking, Monetary Policy and the Political Economy of Financial Regulation
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Banking, Monetary Policy and the Political Economy of Financial Regulation

Essays in the Tradition of Jane D'Arista

Edited by Gerald A. Epstein, Tom Schlesinger and Matías Vernengo

The many forces that led to the economic crisis of 2008 were in fact identified, analyzed and warned against for many years before the crisis by economist Jane D’Arista, among others. Now, writing in the tradition of D’Arista's extensive work, the internationally renowned contributors to this thought-provoking book discuss research carried out on various indicators of the crisis and illustrate how these perspectives can contribute to productive thinking on monetary and financial policies.
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Chapter 16: The last refuge of scoundrels: Keynes–Minsky perspectives on the uses and abuses of the “liquidity defense”

James Crotty and Gerald A. Epstein


The unprecedented demographic changes that are set to unfold in most of the industrialized world are consequential not only because of the decline in the share of working-age population but also because of the rise of an economic class, the retirees, who are expected to behave differently. Specifically, their consumption and saving patterns can be significantly distinct from those of wage earners or capitalists. Overall, retirees tend to consume all of their income. In this chapter I argue that population aging will affect distribution and growth dynamics through its effects on aggregate demand. Second, the success of fiscal policies implemented in response to higher old-age dependency rates will depend on the distribution and demand regimes in place. After this short introduction, the present chapter begins with a section on demographic indicators and a counterfactual analysis of population aging effects on growth and distribution for a few selected countries. The third section introduces demographic changes in a Keynesian model of growth and distribution. Next, the focus is on policies that address the rise in old-age dependency rates with Japan and the US as case studies.

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