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 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 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, the bust in the U.S. residential real estate market, the onset of a U.S. recession and financial weakness at the start of 2008, underlying problems in credit markets, the amount of risk taken by financial firms, and the rapidly changing global economic and financial picture. Mr. Meltzer is completing the second volume of his monumental two-part 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 The Diagnosis and Treatment of Medicare, by Tom Saving and Andy Rettenmeier. 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, Aparna Mathur, 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. In 2007, Mr. Hassett and Ms. Mathur published a working paper on the predictability of tax reforms across countries, and Messrs. Hassett and Viard produced a working paper titled "The Taxation of Corporate Gains on Sales of Depreciable Property," in which they argue that corporate capital gains taxation can depress business investment. 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. Hassett, Ms. Mathur, and Gilbert E. Metcalf recently published a working paper measuring the direct and indirect incidence of a carbon tax. And 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. In February 2007, Mr. Calomiris coauthored a working paper for the National Bureau of Economic Research entitled "Activity-Based Valuation of Bank Holding Companies," and in August 2007 he published a book entitled China's Financial Transition at a Crossroads. Mr. Wallison and Kevin A. Hassett are examining the costs and benefits of the Sarbanes-Oxley Act and Mr. Wallison continues to evaluate the competitiveness of U.S. financial services. Mr. Pollock is investigating the subprime mortgage bust and the deflation of the housing bubble and has created the "Pollock One-Page Mortgage Disclosure Form" to improve the functioning of the mortgage finance system; he also remains involved in credit rating agency issues. Adam Lerrick researches the history and functioning of hedge funds, their role in the economy, and their contribution to the stability of capital markets. In addition, Meassrs. Wallison and Pollock lead a robust body of work on the reform of the housing-related government-sponsored enterprises, Fannie Mae and Freddie Mac, and the regulatory future of the Securities and Exchange Commission. In April 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 May, the Committee issued statements on: "If Bear had Been a Bank," "Mortgage Delinquencies and Foreclosures," and "Reducing Inappropriate Political Pressure on the Federal Reserve."
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. In a recent edition of European Outlook, Mr. Barfield discussed the similarities and differences in the free trade agreement policies of the European Union and the United States. Mr. Barfield 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 recently launched 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.
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. Harold Furchtgott-Roth’s A Tough Act to Follow: The Telecommunications Act of 1996, which outlines the ultimate failure of the act and challenges posed by the FCC, was published in January 2006.
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. Mr. Hayward and Visiting Fellow Joel M. Schwartz have completed a book tited 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 the 2008 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:
