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Sustaining Recovery--Medium-term Prospects and Policies for the U.S. Economy

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  • Dimitri B. Papadimitriou
  • Greg Hannsgen
  • Gennaro Zezza

Abstract

Though recent market activity and housing reports give some warrant for optimism, United States economic growth was only 2.8 percent in the third quarter, and the unemployment rate is still very high. In their new Strategic Analysis, the Levy Institute's Macro-Modeling Team project that high unemployment will continue to be a problem if fiscal stimulus policies expire and deficit reduction efforts become the policy focus. The authors--President Dimitri B. Papadimitriou and Research Scholars Greg Hannsgen and Gennaro Zezza--argue that continued fiscal stimulus is necessary to reduce unemployment. The resulting federal deficits would be sustainable, they say, as long as they were accompanied by a coordinated and gradual devaluation of the dollar, especially against undervalued Asian currencies--a step necessary to prevent an increase in the current account deficit and ward off the risk of a currency crash.

Suggested Citation

  • Dimitri B. Papadimitriou & Greg Hannsgen & Gennaro Zezza, 2009. "Sustaining Recovery--Medium-term Prospects and Policies for the U.S. Economy," Economics Strategic Analysis Archive sa_dec_09, Levy Economics Institute.
    • Handle: RePEc:lev:levysa:sa_dec_09
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    References listed on IDEAS

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    1. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
    2. Wynne Godley & Dimitri B. Papadimitriou & Gennaro Zezza, 2008. "Prospects for the U.S. and the World -- A Crisis That Conventional Remedies Cannot Resolve," Economics Strategic Analysis Archive sa_dec_08, Levy Economics Institute.
    3. Anwar Shaikh & Gennaro Zezza & Claudio dos Santos, "undated". "Is International Growth the Way Out of U.S. Current Account Deficits? A Note of Caution," Economics Policy Note Archive 03-6, Levy Economics Institute.
    4. Claudio H. Dos Santos & Antonio Carlos Macedo e Silva, 2009. "Revisiting (and Connecting) Marglin-Bhaduri and Minsky--An SFC Look at Financialization and Profit-led Growth," Economics Working Paper Archive wp_567, Levy Economics Institute.
    5. Dimitri B. Papadimitriou & Greg Hannsgen, 2009. "Recent Rise in Federal Government and Federal Reserve Liabilities--Antidote to a Speculative Hangover," Economics Strategic Analysis Archive sa_apr_09_2, Levy Economics Institute.
    6. Wynne Godley, 1999. "Seven Unsustainable Processes: Medium-Term Prospects and Policies for the United States and the World," Economics Strategic Analysis Archive 99-10, Levy Economics Institute.
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    Cited by:

    1. Paolo Casadio & Antonio Paradiso, 2012. "Private sector balance, financial markets, and US cycle: a SVAR analysis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 39(6), pages 709-723, October.
    2. Jayati GHOSH, 2010. "Global crisis and beyond: Sustainable growth trajectories for the developing world," International Labour Review, International Labour Organization, vol. 149(2), pages 209-225, June.

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