In a momentous celebration of intellectual brilliance, the Institute for Macroeconomic & Policy Analysis, nestled within the esteemed Department of Economics at American University, extends heartfelt congratulations to none other than Board Member and distinguished Professor Simon Johnson from the MIT Sloan School of Management. Johnson has achieved the prestigious honor of being awarded the 2024 Nobel Prize in Economic Sciences. The Nobel Committee has recognized the trio of Johnson, Daron Acemoglu, and James Robinson for their avant-garde explorations into how political and economic institutions profoundly influence the trajectory of economic growth.
“IMPA is continuously inspired by Professor Johnson’s transformative research, particularly his insights on safeguarding economic rights, which are integral to our mission of architecting tax systems designed to curtail market dominance and mitigate inequality,” remarked Juan Montecino, co-director of IMPA. “This endeavor highlights how contemporary governments can fortify economic rights through the restriction of market power and the championing of competition.
Johnson’s Nobel-winning inquiry elucidates a vital truth: nations that empower broad social groups with economic and political rights tend to experience sustained growth in the long run, whereas those that reserve such privileges solely for the elite stagnate. His accolade marks the second time an IMPA board member has been celebrated with the Nobel in Economics; Joseph Stiglitz, an IMPA Board Member and Columbia University Professor, was similarly honored in 2001 for his groundbreaking work on asymmetric information.
IMPA itself stands as a nonpartisan beacon of research and guidance for policymakers navigating the intricate waters of macroeconomics, inequality, and economic policy. With a strong foundation rooted in cutting-edge research, the institute delves deeply into the economic ramifications and distributional impacts of various policy proposals.
Current policy briefs from IMPA are providing insights into a variety of pressing issues:
Notably, IMPA projects that Vice President Kamala Harris’s proposal to elevate the corporate tax rate to 28 percent is poised to yield a modest uptick in GDP, bolster government revenue, and promote economic equity, while the contrasting approach by former President Donald Trump, advocating for a reduction to 15 percent, seems likely to reverse these benefits.
In another revealing analysis, IMPA posits that hiking dividend income and capital gains taxes from 20 percent to 39.6 percent for those households earning over $1 million could result in a 5 percent increase in government revenue and a 1 percent elevation in GDP over the long haul.
Furthermore, the institute highlights the potential repercussions of a Republican initiative aiming to abolish clean energy credits established in the 2022 Inflation Reduction Act, forecasting detrimental effects on both GDP and labor market stability, alongside wage suppression.
Lastly, IMPA’s scrutiny of the corporate tax cuts embedded in the Tax Cuts and Jobs Act corroborates their predictions regarding the ensuing stagnation of investment, output, employment, and wage growth that has manifested post-implementation.
