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Article Artículo

Three Ways to Regulate Wall Street Pay

Section 956(b) of the Dodd-Frank Act calls for elimination of compensation schemes that encourage “inappropriate risks by covered financial institutions.” What follows is a discussion of precisely how financial sector compensation could be reformed so as to achieve a more stable financial sector.

One of the most important areas for Wall Street reform is banker compensation. While many commentators have been outraged at the amount of money made by traders and executives in the financial sector, it’s clear that compensation packages are more than just a number: the way that banks and other institutions pay their traders and executives is important too. Reforming banker compensation would be one of the best ways to prevent financial crises; indeed, in Crisis Economics, Nouriel Roubini and Stephen Mihm (2010) write: “[Compensation] is where the problem originates, and it’s where the solution should be focused” (pg. 187).

CEPR and Nicolas Buffie / March 03, 2015

Article Artículo

Monty Python and the Holy FEU3R

Jared Bernstein has a great blog post at the WaPo on the unemployment rate associated with full employment. Bernstein refers to this as the FEUR, or "Full Employment Unemployment Rate".

When economists talk about the FEUR, they’re referring to the lowest rate of unemployment that can be achieved before inflation takes off. The concept behind the FEUR is that high levels of employment will be associated with levels of demand that are high enough to induce wage-price spirals.

CEPR and Nicolas Buffie / March 02, 2015