About

Gerald Epstein is a Professor of Economics at the University of Massachusetts Amherst and Co-Director of the Political Economy Research Institute (PERI). He holds a Ph.D. in Economics from Princeton University, an M.P.P. in Public Policy from the Woodrow Wilson School at Princeton, and a B.A. in Political Science from Swarthmore College. His research interests include macroeconomic policy, central banking, and international finance. Epstein has contributed to the development of alternative approaches to monetary policy, emphasizing employment generation and poverty reduction, and has engaged in research on financialization, globalization, and the international financial system. He has been involved in numerous research projects funded by institutions such as the European Central Bank, the Institute for New Economic Thinking, and the United Nations, and has published extensively on topics related to monetary policy, financial regulation, and economic development. Epstein has also held visiting scholar positions in France, China, Senegal, and Italy, and has served as Chair of the Department of Economics at UMass Amherst. His work is characterized by a focus on progressive economic policies and the critique of mainstream financial and monetary practices.

Research topics

• Macroeconomics
• Economics
• Epistemology
• Neoclassical economics
• Econometrics
• Anatomy
• Public economics
• Monetary economics
• Keynesian economics
• Biology
• Positive economics
• Business

Selected publications

• Financialization

  The New Palgrave Dictionary of Economics · 2025-01-01 · 2 citations

  book-chapter1st authorCorresponding

  “Financialization” is the latest and probably most widely used term by analysts trying to “name” and understand the contemporary rise of finance and its powerful role in our economy, politics and society. The term had been developed long before the crisis of 2008, but, since the crisis hit, it has become even more popular. This vast and rapidly expanding literature on financialization has a number of important strands. Some of the literature focuses on clarifying the definition of financialization and assessing whether it is a dominant cause of the ills confronting capitalism or is just a symptom of other, deeper causes; some asks whether financialization is a new “phase” of capitalist development, perhaps a new “mode of accumulation”, or considers whether it is just one among a number of important developments along with “neoliberalism”, “digitization” and “globalization”; other literature tries to measure the nature and extent of financialization; and still other work attempts to analyse the impact of financialization on important phenomena such as financial crises, productive investment, productivity growth, wages and income distribution; and finally, other literature focuses on policies that can improve finance’s role in the economy. In recent years, the term “financialization” has become popularized and has currency far outside of academia; it has also become less specific and less well defined and, for that reason, may have outlived its usefulness as an academically informative category.

  PublisherDOI

• Busting the Bankers' Club

  University of California Press eBooks · 2024 · 1 citations

  1st authorCorresponding
  • Business
  • Biology
  • Anatomy

  An eye-opening account of the failures of our financial system, the sources of its staying power, and the path to meaningful economic reform. Bankers brought the global economic system to its knees in 2007 and nearly did the same in 2020. Both times, the US government bailed out the banks and left them in control. How can we end this cycle of trillion-dollar bailouts and make finance work for the rest of us? Busting the Bankers' Club confronts the powerful people and institutions that benefit from our broken financial system—and the struggle to create an alternative. Drawing from decades of research on the history, economics, and politics of banking, economist Gerald Epstein shows that any meaningful reform will require breaking up this club of politicians, economists, lawyers, and CEOs who sustain the status quo. Thankfully, there are thousands of activists, experts, and public officials who are working to do just that. Clear-eyed and hopeful, Busting the Bankers' Club centers the individuals and groups fighting for a financial system that will better serve the needs of the marginalized and support important transitions to a greener, fairer economy.

  PublisherDOI

• Busting the Bankers' Club

  2023-11-09

  book1st authorCorresponding
  PublisherDOI

• Alternatives to Inflation Targeting Monetary Policy for Stable and Egalitarian Growth: A Brief Research Summary

  Scholarworks (University of Massachusetts Amherst) · 2022-05-02 · 3 citations

  preprintOpen access1st authorCorresponding

  Many countries in the developing world have adopted an approach to monetary policy that focuses on maintaining a low level of inflation, to the exclusion of other important objectives such as employment generation, increasing investment or reducing poverty, despite the widespread evidence that moderate levels of inflation have few or no costs. Some have even adopted formal “inflation targeting”, an approach which commits the central bank to hitting a fairly rigid inflation target, often as low as 2%. However, this focus has led to slower economic growth and lower employment growth, without succeeding in lowering inflation at a smaller economic cost than traditional methods of inflation fighting. Clearly, it is time to find an alternative to inflation targeting. This paper presents the real targeting approach to monetary policy, which I argue is superior alternative to the costly and ineffective inflation targeting approach. Under this real targeting approach, central banks are given a country appropriate target such as employment growth, unemployment, real GDP or investment, usually subject to an inflation constraint. Given these two targets – the real target and the constraint – the central bank will find multiple tools to reach these targets, designing new tools and rediscovering old tools such as asset based reserve requirements and other credit allocation techniques. The real targeting approach might also be complemented by other policies, such as capital management techniques to deal with possible capital flight. The real targeting approach has the potential to make central bank policy more transparent, more accountable, and more socially useful than most currently existing central bank structures.

  PublisherOA PDFDOI

• Employment-Oriented Central Bank Policy in an Integrated World Economy: A Reform Proposal for South Africa

  Scholarworks (University of Massachusetts Amherst) · 2022-05-02 · 4 citations

  preprintOpen access1st authorCorresponding

  The South African Reserve Bank and Ministry of Finance have adopted inflation targeting and the gradual relaxation of exchange controls (along with control of public spending and financial liberalization) as the foundation of their economic policy in an attempt to win the confidence of foreign investors and to attract more foreign investment. However, this policy has not succeded in generating employment growth or investment. Instead, it has contributed to high real interest rates and relative stagnation. In order to improve central bank and capital management policies and have them contribute more to solving the fundamental problems of unemployment and poverty facing the South African economy, three reforms should be undertaken: 1) The Reserve Bank should scrap its inflation targeting approach and adopt a more even handed approach which would target employment growth subject to an inflation constraint. 2) Rather than loosening the exchange controls system, the Reserve Bank and Ministry of Finance should enforcethe existing controls more strictly, and explore other ways, such as transaction taxes and speed-bumps, to further insulate South African macroeconomic policy from global pressures. 3) The South African government should implement other policies and institutions, such as special lending windows, underwriting facilities, asset based reserve requirements and subsidized credit, to further insulate the South African financial markets from the international capital markets and channel credit to employment generating and socially productive activities. This will correct a serious market failure in which international financial markets fail to take into account the social rates of return available on productive investments in South Africa.

  PublisherOA PDFDOI

• Threat Effects and the Impact of Capital Mobility on Wages and Public Finances: Developing a Research Agenda

  Scholarworks (University of Massachusetts Amherst) · 2022-05-02 · 11 citations

  preprintOpen access1st authorCorresponding

  The impact of increased openness to trade, financial flows and foreign direct investment on the distribution of costs and benefits from globalization remains a controversial and poorly understood subject, despite an enormous amount of research undertaken by economists and other social scientists in recent years.(See, Baker, Epstein, Pollin, 1998; Journal of Economic Perspectives, 1995 for recent discussions of many of these issues). Among the most important and most studied issues is the impact of globalization on inequality and the related issue of the impact of globalization on the roles governments choose to play and on their ability to achieve their goals.

  PublisherDOI

• Central Banks as Agents of Economic Development

  Scholarworks (University of Massachusetts Amherst) · 2022-05-02 · 87 citations

  preprintOpen access1st authorCorresponding

  In the last two decades, there has been a global sea change in the theory and practice of central banking. The currently dominant “best practice” approach to central banking consists of the following: (1) central bank independence (2) a focus on inflation fighting (including adopting formal “inflation targeting”) and (3) the use of indirect methods of monetary policy (i.e., short-term interest rates as opposed to direct methods such as credit ceilings). This paper argues that this neo-liberal approach to central banking is highly idiosyncratic in that, as a package, it is dramatically different from the historically dominant theory and practice of central banking, not only in the developing world, but, notably, in the now developed countries themselves. Throughout the early and recent history of central banking in the U.S., England, Europe, and elsewhere, financing governments, managing exchange rates, and supporting economic sectors by using “direct methods” of intervention have been among the most important tasks of central banking and, indeed, in many cases, were among the reasons for their existence. The neoliberal central policy package, then, is drastically out of step with the history and dominant practice of central banking throughout most of its history.

  PublisherDOI

• Proposals for Effectively Regulating the U.S. Financial System to Avoid Yet Another Meltdown

  Scholarworks (University of Massachusetts Amherst) · 2021-09-20 · 32 citations

  preprintOpen accessSenior author

  It is now clear that we are in the midst of the worst financial crisis since the Great Depression. This crisis is the latest phase of the evolution of financial markets under the radical financial deregulation process that began in the late 1970s. This evolution has taken the form of cycles in which deregulation accompanied by rapid financial innovation stimulates powerful financial booms that end in crises. Governments respond to crises with bailouts that allow new expansions to begin. As a result, financial markets have become ever large and financial crises have become more threatening to society, which forces governments to enact ever larger bailouts. This process culminated in the current global financial crisis, which is so deep rooted that even unprecedented interventions by affected governments have thus far failed to contain it. In this paper we first analyze a series of structural flaws in the current financial system that helped bring on the current crisis, and then propose a nine point regulation policy, informed by our analysis, designed to end this destructive dynamic. We believe that if enacted and vigorously enforced, the policy could sharply reduce financial instability and minimize the problems caused by future financial cycles.

  PublisherDOI

• The Empirical and Institutional Limits of Modern Money Theory

  Review of Radical Political Economics · 2020 · 6 citations

  1st authorCorresponding
  • Economics
  • Positive economics
  • Macroeconomics

  Modern Money Theory (MMT) economists acknowledge a number of empirical and institutional limitations on the applicability of MMT to macroeconomic policy, but they have not attempted to explore these empirically nor have they adequately addressed their implications for MMT’s main macroeconomic policy proposals. This paper identifies some of these important limitations, including those stemming from modern international financial markets, and argues that they are much more binding on the policy applicability of MMT than many of MMT’s advocates appear to recognize.

  PublisherDOI

• How much should we trust five-year averaging to purge business cycle effects? A reassessment of the finance-growth and capital accumulation-unemployment nexus

  Economic Modelling · 2020 · 8 citations

  Senior authorCorresponding
  • Economics
  • Econometrics
  • Macroeconomics
  PublisherDOI

Frequent coauthors

• James Crotty

  The Open University

  77 shared

• Tom Schlesinger

  University of Massachusetts Amherst

  66 shared

• Matías Vernengo

  Bucknell University

  66 shared

• Patrick Bond

  64 shared

• Robert A. Blecker

  American University

  64 shared

• Elissa Braunstein

  Colorado State University

  40 shared

• Jose

  Universidade Federal do Rio de Janeiro

  36 shared

• Nelson H. Barbosa‐Filho

  36 shared

Awards & honors

• Samuel F. Conti Faculty Fellowship Award, University of Mass…
• Chancellor’s Medal, University of Massachusetts Amherst | 20…
• Award for Outstanding Accomplishments in Research and Creati…