Epstein Graduate

Economists, Ethics, and Financial Policy

Gerald Epstein

Gerald Epstein, UMass Amherst economics professor and founding co-director of the Political Economy Research Institute, and Jessica Carrick-Hagenbarth, UMass Amherst economics Ph.D. student, examine the conflict of interest that can occur when academic financial economists, presumed to be objective experts, fail to report their private financial affiliations in the course of their public discourse in the media. The authors look at these linkages in the cases of nineteen academic financial economists, and assess the impacts that these conflicts may have had on the economists’ proposals for financial reform policy.

Jessica Carrick-Hagenbarth

>>Read media coverage of this study in the Boston Globe, New York Times and on NPR
>>Download “Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to Set Ethical Standards for the Economics Profession” 
>>Read a related essay, “Conflicts of Interest and the Financial Crisis”

Undergraduate Students

Two UMass students ask, “How Are the Kids?”

Anastasia Wilson '11 & Mark Paul '11

Two UMass Amherst undergraduate students, Mark Paul ’11 and Anastasia Wilson ’11, were recent guest contributors for The Baseline Scenario, an economic blog dedicated to explaining global economic issues and developing policy proposals.  In their article, “How Are the Kids? Unemployed, Underwater, and Sinking” they discuss challenges for young college graduates.  According to Paul and Wilson, not only are young adults having trouble landing a job, with only half of B.A. holders able to secure a position which requires such a degree, they are also facing massive student load debt.  The average student debt for the class of 2008 was $23,200. 

Paul and Wilson suggest that investing in green energy and technology may be the solution.  “Green collar industry would naturally target the young workers who are up to date on the high-tech nature of green jobs, and much research and development would, as with most budding industries, take place at academic research institutions like public universities – a two-for-one stimulus in both jobs and education.”  Read more…

This article has also been been referenced by Naked Capitalism and The Huffington Post.

Crotty Dube Epstein UMass Economics

Econ Faculty Win Inaugural INET Grants

The Institute for New Economic Thinking (INET) has awarded grants to two UMass Amherst projects: 

Arin Dube

Arin Dube (& Ethan Kaplan, Columbia University)
A Spatial Approach to Macroeconomic Inference

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, (3.) estimating the impact of raising wages during recessions. The end product of the project will make both methodological and substantive contributions to modern macroeconomics.

Gerald Epstein

Gerald Epstein & James Crotty
How Big is Too Big? What Should Finance Do and How Much Should It Be Cut Down to Size?

The financial sector has grown significantly over the last several decades and some have suggested that the sector 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 to 2) estimate the share of financial innovations that are “socially inefficient.” We will then utilize these data sets 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.

About INET
Launched in October 2009 with a $50 million commitment from George Soros and driven by the global financial crisis, the Institute for New Economic Thinking (INET) is dedicated to empowering and supporting the next generation of economists and scholars in related fields through research grants, Task Force groups, academic partnerships, and conferences. INET embraces the professional responsibility to think beyond current paradigms. Ultimately, INET is committed to broadening and accelerating the development of innovative thinking that can lead to insights into and solutions for the great challenges of the 21st century and return economics to its core mission of guiding and protecting society.