Economic Policy Studies

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. AEI's economic policy team consists of leading thinkers from government, academia, and the private sector including Kevin A. Hassett, R. Glenn Hubbard, Desmond Lachman, Adam Lerrick, John H. Makin, N. Gregory Mankiw, Allan H. Meltzer, and Vincent R. Reinhart. These scholars study the national budget, monetary policy, and international markets and provide commentary on pressing matters such as the nation's budget deficit, financial crisis, and economic stimulus plan. Mr. Makin writes the highly regarded monthly Economic Outlook. Among the topics recently addressed by this publication are lessons from the financial crisis, China's current economic growth and risks ahead, and Fed efforts to battle deflation. Mr. Lachman is focusing on the scope for the multilateral coordination of macroeconomic policies across the major economies to address the current crisis, and Mr. Meltzer is working on the second of three volumes of his momentous project, A History of the Federal Reserve. Messrs. Hassett and Philip Levy have launched a project examining the impact of various policies - tax, regulatory, or employee benefits - on U.S. businesses' infrastructure decisions and how to optimize U.S. competitiveness.

Health Care

AEI's Health Policy Studies Program is deeply engaged in the current policy debates. Joseph Antos, Roger Bate, John E. Calfee, Newt Gingrich, Scott Gottlieb, Robert Helms, Leon R. Kass, Aparna Mathur, Thomas P. Miller, and Sally Satel are providing leading ideas on the financing of health reform, the regulation of health care, coverage for the uninsured, Medicare reform, and the effects of price controls on pharmaceutical R&D. They are identifying and explaining the significance and future impact of the problems facing our health care system; providing response and evaluation of various proposals introduced by policymakers on both sides of the aisle; and offering alternative, pro-market, innovative solutions to our nation's health care crisis that will promote greater efficiency, increased consumer involvement, and smarter health purchasing decisions. Joe Antos recently published a working paper entitled "The Case for Real Health Reform: Five Key Principles," and edited with Bob Helms the soon to be released monograph in AEI's series of studies on Medicare reform, Bring Market Prices to Medicare: Essential Reform at a Time of Fiscal Crisis (Robert Coulam, Roger Feldman, and Bryan E. Dowd). The program's scholars have been regularly publishing op-eds in the Wall Street Journal and appearing on national television news programs. On a wider front, AEI's program also devotes attention to global health issues like counterfeit medicines and the role of international institutions such as the World Health Organization and the U.S. Agency for International Development.

Tax and Entitlement Reform

AEI's program on tax and entitlement reform includes the work of Andrew G. Biggs, Alex Brill, Kevin A. Hassett, R. Glenn Hubbard, Bill Thomas, and Alan D. Viard. This program places particular emphasis on research about income distribution, transition costs, marginal tax rates, and economic effects of corporate taxation. Our scholars also examine topics such as the dynamic scoring and the effects of taxation on investment, savings, and entrepreneurial activity; and options to fix the alternative minimum tax. Mr. Hassett, Lawrence Lindsey, and Aparna Mathur recently authored a paper quantifying the extent of redistribution that takes place through the tax code and identified how the multitude of tax credits affect the marginal tax schedule for lower income groups. Mr. Hassett and Ms. Mathur are finishing a world history of taxation that describes trends in tax policy in the United States and elsewhere, providing a data-driven guide forthe coming tax policy debate, and Messrs. Hassett and Viard are working on a project looking specifically at California tax reform. Mr. Biggs is currently evaluating the benefits of Social Security reforms, and started a project that will seek to connect entitlements to imbalances in the broader financial system. He addresses a number of wide-ranging issues in AEI's Retirement Policy Outlook series; one upcoming essay will examine a new financial product to assit in retirement planning, another will consider optimal retirement rates. At an AEI conference last fall, Mr. Viard began a new project with Robert Carroll of the Tax Foundation to consider the merits of a progressive consumption tax, which are outlined in a recent Tax Policy Outlook. Earlier this year, AEI Council of Academic Advisers member Martin Feldstein was named chairman of the new Tax Panel set up by the White House's Economic Recovery Advisory Board to provide recommendations for policy change in this area.

Financial Markets

Directed by Peter J. Wallison and Alex J. Pollock, and including the work of Vincent R. Reinhart and Charles W. Calomiris, AEI's Financial Markets Program covers banking, insurance and securities regulation, accounting reform, corporate governance, the mortgage and housing credit markets, and consumer finance. The recent turmoil in the financial world and call for increased regulation has prompted a large body of work by AEI scholars. A history of developments and links to past publications, such as Mr. Wallison's prescient warnings about Fannie Mae and Freddie Mac, are available on AEI's website. In the months ahead, Mr. Wallison will coauthor a book on the causes of the financial crisis, and Mr. Pollock will complete his monogrpah, How to Think About Financial Cycles, Bubbles, and Crises. Mr. Pollock is also organizing a conference to examine the likelihood that the U.S. financial system will be re-privatized. Mr. Reinhart is leading a book-and-conference project that will bring together academics and market players to tell an honest narrative of the crisis and to outline the way forward. In July, Congress appointed Mr. Wallison and AEI visiting fellow Bill Thomas to serve on the new Financial Crisis Inquiry Commission.

International Trade and Finance

AEI's Program on International Economics includes the work of Claude Barfield, Charles W. Calomiris, Desmond Lachman, Philip I. Levy, and Allan H. Meltzer. Their research is concerned with international economic bodies, the impact of globalization on developing countries, free trade agreements, and the reform of international financial institutions. Last fall, the program launched the International Economic Outlook, a publication that addresses contemporary issues in international economics. Mr. Barfield is tracking and analyzing trade policies under the Obama administration, and will continue to work on his study of China's increasing importance in world trade and investment, The Eagle and the Dragon: The United States, China, and the Rise of Asian Regionalism. Mr. Levy is writing a monograph that will address new critiques of international trade, and is writing a paper laying out a new conceptual framework for identifying protectionism.

AEI Center for Regulatory and Market Studies

AEI's Center for Regulatory and Market Studies has played, and continues to play, a crucial "watchdog" role on areas of first importance to the U.S. economy, examining the impact of federal regulation on consumers, businesses, and government and aiming to improve the process of regulatory decision-making. Ken Green has been organizing a regular seminar series to address regulatory issues that include food safety regulations, environmental regulations, climate change, and net neutrality. The most recent seminar was held in September, which evaluated the role Sarbanes Oxley played in the financial crisis. The Center recently held an AEI conference titled "Deregulation Under Bush 43 - Myths and Realities," and in June held a conference to assess Treasury Secretary Tim Geithner's proposed plan for a "systemic regulator" to oversee the entire financial system. Alan Greenspan gave the keynote address. The Center will continue to hold such conferences (such as Cass Sunstein's forthcoming lecture on "Cost Benefit Analysis and Open Government") and address key policy issues in the forthcoming Regulatory Outlook series of essays (the first will consider the effects of Sarbanes-Oxley). Christopher DeMuth is contributing important new work to the Center, focusing his research on the growth of government.

Energy and Environment Studies

AEI's Energy and Environment 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, carbon taxes, 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 has been renamed the Energy and Environment Outlook. Future issues will examine adaptation to climate change, potential energy savings and GHG reducations from a telecommuting program for Federal employees, and on developed countries' obligation to "go first" in reducing GHGs. Messrs. Hayward and Green are analyzing various energy sources for their practicality and cost-effectiveness. Upcoming projects will examine electricity deregulation and the feasibility of implementing renewable energy technology on a large sclae in the short-term. Newt Gingrich's book on American energy policy, Drill Here, Drill Now, Pay Less, has received much attention from government officials as well as the general public. Several of the program's upcoming projects promise to do the same. Lee Lane, author of Strategic Options for Bush Administration Climate Policy, and Samuel Thernstrom are examining "geoengineering" options to address global climate change; and Roger Bate is researching water and pesticide policies in developing countries. The 2009 edition of Mr. Hayward's annual report, Index of Leading Environmental Indicators, was recently released, which highlights the significant environmental developments and milestones in the United States and worldwide. Newly arrived resident scholar Roger Scruton researches environmental protection from a cultural and philosophical perspective.

Research Highlights