Job Opening: Macroeconomic Research Associate

Would you like to help make economic history, and learn why economic policy and analysis are now in such disarray -- and how they could become more of a credible science that is easier to learn and teach?

The following macroeconomic policy tools are designed to provide key aspects of a more transparent, full-employment-oriented economic program for RESPONSIBLE GOVERNMENT. We need a Ph.D.-skill-level associate who understands the significance of this project and who could help complete the underlying empirical research and preparation for publication of these proposals. (Other think tanks with appropriately talented personnel and related resources are invited to join in this project.)

Monetary Policy -- "A Challenge to Bernanke" for a more transparent and more reliable monetary policy:

1. End the present charade of targeting interest rates and focus on managing money growth directly by:
   • using the more precise pre-1980 definition of "money" (M1), which effectively separates bank-created checkable-deposit transaction money from saving-type financial assets by prohibiting interest payments on all checkable deposits.
   • establishing a high enough reserve requirement to facilitate direct Fed management of money growth -- preferably 100%, which would give the Fed a monopoly of checkable-deposit money creation.
2. Use the pre-1980 formula relating money growth to GDP growth to continually maintain a "soft landing" recovery track towards 4% unemployment GDP. (GDPgr = Mgr - MDRgr, where MDR is the reciprocal of the traditional "velocity" measure.)
3. Recognize this precise monetary management as the most effective long-run approach to maintaining stable 2% inflation.

Fiscal Policy -- transparent Standardized "dual-deficit" Budget:

1. Remove Social Security entirely from the present "unified" budget.
2. Adjust the CBO's "standardized" budget definition from the present 5.2% to a 4%-unemployment (year 2000) definition.
3. Include in every publication of deficit data both of the resulting deficit components -- the Congress-determined (4% unemployment projection) Policy Deficit and the "economy-determined" High-Unemployment Deficit -- with pie charts of their main components. This is a key tool for achieving greater fiscal transparency and responsibility.

Social Security -- Our empirical research has found that all key aspects of Social Security finances are closely correlated with the unemployment rate -- apparently the main reason why the Trustees' 4.5% unemployment projection (unlike their other projections) has no financial problems for the foreseeable future.

Solution: Provide SS with "unemployment insurance." Whenever the actual unemployment rate goes above 4.5% (or 4%) and causes the current Social Security income to fall below the corresponding amount in the Trustee's financially-sound 4.5% unemployment projection, this shortfall would be made up by an automatic transfer from the main budget to the Social Security Trust Fund. The amount of this transfer would become part of the High-Unemployment Deficit component of the Dual-Deficit budget (see previous paragraph). There would be no need for any transfer during periods when the unemployment rate is responsibly held below 4.5%. This solution involves no tax increase, no benefit cut, no increase in the Unified Budget deficit.

Recession/recovery dating -- The "official" NBER dating of the first Bush recession/depression, using its 80-year old "business cycle" conceptual framework, was March 2001 to December 2001. Calculated from an appropriate growth-trend standard of reference -- as reflected in employment data and the way most businesses and workers "felt" it -- that recession/depression was actually mid-2000 to mid-2003. Similarly, the NBER dated the beginning of the present recession/depression as December 2007, while most indicators placed it as mid to late 2006.

For more about our research and policy agenda, see Coordinataed Macroeconomic Management Tools, which also suggests many interesting thesis and joint publication possibilities. Work involves conceptual development, chart making, literature surveys, editing, etc.