The U.S. and World Economies
Part of AEI’s core mission is the preservation and promotion of free market economies--in the United States and around the world. Last fall, the former director of the Federal Reserve Board's Division of Monetary Affairs, Vincent R. Reinhart, joined AEI's team, which includes Kevin A. Hassett, Adam Lerrick, John H. Makin, Allan H. Meltzer, Desmond Lachman, and R. Glenn Hubbard, to examine such topics as the current financial crisis, the national budget, monetary policy, international markets, and major trends in the global economy. Mr. Makin writes the highly regarded Economic Outlook. Among the topics recently addressed by this monthly AEI publication are the governmental bailouts of financial firms, the Bank of International Settlements and the effect of house and oil prices on the economy, the Fed's dilemma between easing monetary policy and the need to resist higher inflation, and the bust in the U.S. residential real estate market. Mr. Meltzer is completing the final volumes of his monumental study, A History of the Federal Reserve, which will cover the Federal Reserve Accord of 1951 through the 1990s. Mr. Reinhart recently presented a working paper with Carmen M. Reinhart at the National Bureau of Economic Research International Seminar on Macroeconomics titled "Capital Flow Bonanzas: An Encompassing View of the Past and Present." The paper examines the relationship between international financial and economic variables and international flows of capital.
Health Care
AEI’s Health Policy Studies Program is a leader in the debates on Medicare reform, health coverage for the uninsured, vaccine development, the effects of price controls on pharmaceutical R&D, and the application of private sector solutions to public health problems. Joseph Antos, Roger Bate, John E. Calfee, Newt Gingrich, Scott Gottlieb, Robert Helms, Leon R. Kass, Aparna Mathur, Thomas Miller, and Sally Satel are conducting research on public and private financing of medical care; the organization of health care sectors, increasing value in health care by improving patient and consumer decisions and measuring the quality and efficiency in health care delivery; pricing and marketing regulations; reform of the FDA; the regulation and improvement of medical innovation and biomedical knowledge; and the social, legal, and ethical issues in genetic research. The program is also devoting much attention to global health issues, such as the role of the World Health Organization and the U.S. Agency for International Development, AIDS treatment in the developing world, international pharmaceutical price controls, counterfeit medicines, and intellectual property rights. Mr. Bate's book, Making A Killing: The Deadly Implications of the Counterfeit Drug Trade, was published by the AEI Press in May. Other recent publications include Biotechnology and the Patent System: Balancing Innovation and Property Rights, by Mr. Calfee and Claude Barfield; The Business of Health: The Role of Competition, Markets, and Regulation, by Robert L. Ohsfeldt and John E. Schneider; and Innovation and Technology Adoption in Health Care Markets, by Tomas J. Philipson and Anupam B. Jena. The latest books in AEI's "Studies on Medicare Reform" series include Markets without Magic: How Competition Might Save Medicare, by Mark Pauly, and How to Fix Medicare: Let's Pay Patients, Not Physicians, by Roger Feldman, professor of health insurance and economics at the University of Minnesota.
Tax and Entitlement Reform
AEI’s program on tax and entitlement reform is directed by Kevin A. Hassett and includes the work of Andrew Biggs, Alexander M. Brill, R. Glenn Hubbard, Bill Thomas and Alan D. Viard. The full range of issues presented by the major tax reform proposals are assessed by this program, with particular emphasis on income distribution, transition costs, marginal tax rates, and international taxation of corporate income. AEI examines such topics as the Pension Protection Act of 2006; dynamic scoring and the effects of taxation on investment, savings, and entrepreneurial activity; options to fix the Alternative Minimum Tax; environmental tax policy; cross-border sales tax reform; tax havens and foreign direct investment; the economic implications of taxing corporate capital gains; and e-commerce taxation. Mr. Biggs is analyzing reforms to improve the effectiveness and long-range solvency of the social security program (he published an AEI working paper on the issue in July), and is also examining the presidential candidates' positions on the income tax cuts, which expire in 2011. Alan Viard is launching a new project with Robert Carroll of the Tax Foundation to consider the merits of a progressive consumption tax system. In March 2008, AEI hosted a major day-long conference on the effects of corporate taxation, featuring AEI scholars and other top economists. Additionally, Mr. Viard hosted a major day-long AEI event on May 30, focusing on tax policy lessons from the 2000s. He commissioned several essays that were presented at this conference and will be published in a forthcoming volume by the AEI Press.
Financial Markets
Directed by Peter J. Wallison, Alex J. Pollock and Charles W. Calomiris, the Financial Markets Program covers banking, insurance and securities regulation, accounting reform, corporate governance, the mortgage and credit markets, and consumer finance. The recent turmoil in the financial world has prompted a large body of work by AEI's scholars. A new AEI webpage provides up-to-date infomation on unfolding developments and links to past publications such as Peter Wallison's prescient warnings about Fannie Mae and Freddie Mac (www.aei.org/financialcrisis). Mr. Wallison and Kevin A. Hassett are also continuing to examine the costs and benefits of the Sarbanes-Oxley Act, and Adam Lerrick is researching the history and functioning of hedge funds, their role in the economy, and their contribution to the stability of capital markets. Additionally, in 2007 the AEI Press published Competitive Equity: A Better Way to Organize Mutual Funds, by Mr. Wallison and Robert E. Litan. The AEI-sponsored Shadow Financial Regulatory Committee, comprised of economists and lawyers specializing in financial market analysis, is a key component in AEI's work on regulatory reform. In September, the Committee discussed Fannie Mae and Freddie Mac, the recent financial turmoil, and the expansion of Federal Reserve regulatory authority.
International Trade and Finance
AEI’s International Economic and Trade Policy Program includes the work of Claude Barfield, Charles W. Calomiris, Desmond Lachman, Philip I. Levy, and Allan H. Meltzer. Their research is concerned with the World Trade Organization, the evolution of the Doha Round, the ASEAN+3 Free Trade Agreement, the impact of globalization on developing countries, and the reform of international financial institutions. The program is proud to announce the commencement of the International Economic Outlook, a periodic publication that will allow AEI scholars to address contemporary issues in international economics. The first issue, "Does Trade Policy Matter?" by Mr. Levy, discusses the need to reinvigorate public support for free trade. Mr. Barfield has consistently written for other Outlook series, and he is also writing The Eagle and the Dragon: The United States, China, and the Rise of Asian Regionalism, a book to be published by the AEI Press that will analyze China’s increasing importance in world trade and investment. Mr. Levy is embarking on a new monograph that will address a series of recent critiques by distinguished academics on international trade.
AEI Center for Regulatory and Market Studies
Formerly known as the AEI-Brookings Joint Center, the AEI Center for Regulatory and Market Studies examines the impact of federal regulation on consumers, business, and government, and aims to improve the process of regulatory decision-making. The Center sponsors a wide-ranging program of research, conferences, and publications. Under the direction of Robert W. Hahn, the AEI Center analyzes federal regulations and rulemaking proposals, recommendations for improving regulatory policy through the use of cost-benefit analysis, private market alternatives to government dictates, and studies of regulatory programs and their economic consequences. The Center plans to commission studies and analyses on topics such as the effect of state and federal gambling laws on the emergence of prediction markets, the auction of critical spectrum, and the expected U.S. regulations aimed at reducing greenhouse gas emissions. Recent monographs include Antitrust Policy and Vertical Restraints, edited by Mr. Hahn; Information Markets: A New Way of Making Decisions, edited by Mr. Hahn and Paul Tetlock; and Regulation Misled by Misread Theory: Perfect Competition and Competition-Imposed Price Discrimination, by William Baumol. AEI recently published Why Groups Go to Extremes, by Cass R. Sunstein, based on his 2007 remarks as the distinguished lecturer of the AEI Center For Regulatory and Market Studies.
Telecommunications and Information Technology
Telecommunications and information technology regulation is a particular area of focus for the AEI Center for Regulatory and Market Studies. The Center's research examines U.S. and foreign regulatory and antitrust policy concerning telecom, IT, and related network industries, where government policies can dramatically affect innovation, consumers, and overall economic welfare. The program addresses a wide variety of current policy issues including the regulation of broadband access and wireless services, the concept of net neutrality, competition in long-distance services, the reform of the Federal Communications Commission, and the effect of regulation on investment in telecommunications infrastructure in developing countries. Robert W. Hahn recently issued an "Economists' Statement on Network Neutrality Policy" with a group of scholars from the United States and Europe, warning that proposals aimed at implementing net neutrality are likely to do more harm than good. Proposed legislation would mandate that Internet service providers exercise no control over the content that flows over their lines and would bar providers from charging more for preferentially faster access to the Internet. In April, the Center organized a major conference that examined the economic costs and benefits of imposing regulatory constraints on the management of high-speed Internet networks. In recent editions of The American, editor Nick Schulz explored new wireless technologies in "The Internet of Things" (November/December 2007), which detailed the possibilities of a hyperlinked physical world. In "FCC vs. Innovation" (January/February 2008), he delved into the historical relationship between regulations and technology.
Environmental Studies
AEI's Environmental Studies Program, led by Steven F. Hayward, emphasizes the need to design environmental policies that protect not only nature but also democratic institutions and human liberty. The program covers a wide range of research areas, including climate change, energy policy, and the Clean Air Act, as well as biotechnology, agriculture, and the debate over genetically modified organisms. To better capture the aim of its efforts, the program's leading publication is now named the Energy and Environment Outlook. Mr. Hayward and Visiting Fellow Joel M. Schwartz have completed a book titled Air Quality in America: A Dose of Reality on Air Pollution Levels, Trends, and Health Risks, which was released in December and challenges the claims of the American Lung Association’s annual air quality report. Kenneth P. Green is studying energy deregulation at the state and federal level and alternative energy resources, such as ethanol, clean coal, and renewables. Sam Thernstrom and Lee Lane, author of Strategic Options for Bush Administration Climate Policy (AEI Press, 2006), are examining possible "geoengineering" solutions to global climate change and in June hosted an AEI conference to launch this major two-year research initiative. Roger Bate is researching water and pesticide policies in developing countries. Recent publications include Drill Here, Drill Now, Pay Less, by Newt Gingrich and Vince Haley; the Index of Leading Environmental Indicators, edited by Mr. Hayward; and All the Water in the World, by Mr. Bate.
Other sections of AEI's current research highlights:
