International economist releases two new books

Assaf Razin
Razin

For economist Assaf Razin, November has proven a defining moment in his career, with the release of two new books representing more than a decade of work. Razin calls it a “consolidation moment,” though both books having a November release date is entirely coincidental.

“Understanding Global Crises: An Emerging Paradigm” (MIT Press) is based on Razin’s graduate lectures that synthesize the differing views of economists. The first chapters give a comprehensive historical account of major financial crises in the last 30 years around the globe, identifying the essential elements to be understood: the currency crisis, the stock market, the banking crisis, the macroeconomic mismanagement that leads to crisis, and the birth and bursting of bubbles.

The subsequent chapters are targeted to graduate students and professionals who can penetrate the analytics Razin applies to these elements of financial crises. In the epilogue he addresses the “emerging paradigm” of the title. “I offer no definite conclusions,” says Razin, the Friedman Professor of International Economics. “We don’t have an overarching framework in economics to understand a crisis of this global proportion.” But, he adds, the very heated exchange over austerity vs. stimulus policies has produced new ideas and new literature.

book cover
 
book cover
 

The second book, co-authored with Efraim Sadka of Tel Aviv University, is based on research the two have been collaborating on for the last 15 years. “Migration State and Welfare State: Why Is America Different from Europe?” (Palgrave-MacMillan Pivot) examines two key policy differences between Europe and the U.S. While both are welfare states without free migration from the rest of the world, the European Union has more generous welfare state provisions, higher taxes and more liberal immigration policies than the U.S.

“There’s no free migration because they are welfare states and thus are magnets to immigrants who could burden and undermine the welfare state,” explains Razin. But while both Europe and the U.S. employ restrictions on migrants, 60-70 percent of world migrants who are skilled come to the U.S. In contrast, Europe attracts a majority of unskilled labor.

The key difference, the researchers found, lies in the organization of the U.S. as a federal system of states, with federalized taxation and welfare and migration policies. The EU, in contrast, is a collection of 28 independent states with little coordination of fiscal and migrant policy. The EU’s financial fragmentation results in competition between states, which leads to greater generosity and more open migrant pools in those states. The EU’s aging population is also a factor, putting pressure on states to provide increased welfare benefits.

Razin came to Cornell from Tel Aviv University 14 years ago, where he was instrumental in building its Department of Economics and served as dean and director of the program.

 He has been at Cornell for 14 years, focusing on research and teaching the “superb” undergraduate and graduate students he’s found here.

“It’s a joy to influence students at a formative age,” Razin says. “Some will grow up to be business, academic, and political leaders. That’s the joy of teaching.”

Linda B. Glaser is a staff writer for the College of Arts and Sciences.

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