The Berkeley Blog » Carola Binder

Wealth and motivations for saving

Carola Binder — Mon, 25 Mar 2013 02:56:03 +0000

In a recent column in the Atlantic called “Building the Wealth of the Poor and Middle Class,” Noah Smith suggests a few ways to improve the unequal distribution of wealth in America. He notes that “one obvious thing we could do to make wealth more equal is – surprise! -redistribution…Giving the poor and middle-class more income will boost the amount they are able to save, the percentage they are willing to save, and the return they get on those savings. Part of the reason America’s wealth distribution is so unequal in the first place is that our income distribution is very unequal.” ... More >

The Great Recession and preferences for redistribution

Carola Binder — Mon, 04 Mar 2013 19:26:33 +0000

Differences in attitudes towards welfare and redistribution are an important source of political tension, especially during recessions. What factors shape people’s attitudes towards welfare and redistribution?

There are two main strands of thought on this question in the literature. One strand emphasizes economic self-interest as a key determinant of attitudes toward welfare and distribution. According to this view, people’s position in the labor market, exposure to layoff risk, and ﬁnancial status are the main factors determining their attitudes. Another strand emphasizes different ideological dispositions on issues such as fairness, equality, and the role of government.

It is empirically difficult to distinguish between ... More >

Pope Benedict XVI on crisis, development, and truth

Carola Binder — Mon, 11 Feb 2013 16:49:11 +0000

Today, Pope Benedict XVI announced that he will resign from his ministry at the end of the month, citing declining strength in his advanced age. His Papacy began in 2005 and many of his written messages reflect upon the global economic and financial crisis that characterized the world to which he ministered.

Most notably, his 2009 encyclical Caritas in veritate (Charity in Truth) is a direct response to the crisis, reflecting on poverty and development, moral aspects of economic life, human rights, environmental responsibility, and other economic issues. The encyclical is fairly long, but I have selected some excerpts that may be of interest. First, a passage about ... More >

Overheating and the Fed

Carola Binder — Fri, 08 Feb 2013 02:44:45 +0000

Governor Jeremy Stein of the St. Louis Federal Reserve gave a speech on February 7 called “Overheating in Credit Markets: Origins, Measurement, and Policy Responses.” Overheating is a term he uses to describe a credit market with low interest rates, lax lending standards, and high risk-taking by investors “reaching for yield.” The problem with overheating is that it can contribute to financial instability. A boom followed by a bust can create harmful spillovers for the economy.

Both monetary policy and regulatory policy can potentially address overheating. In the speech, Stein describes an approach called decoupling, which holds that monetary policy should restrict its attention to ... More >