About the Hoover Institution’s Working Group on Economic Policy

The Working Group on Economic Policy conducts research on current financial conditions as well as prevailing economic policies and issues, including domestic and global monetary, fiscal, and regulatory policies. Ideas that examine market and government dimensions of solutions are promoted, with the goal of increasing the extent and breadth of national and global prosperity.

For 25 years starting in the early 1980s, the U.S. economy experienced an unprecedented economic boom. Economic expansions were stronger and longer than in the past. Recessions were shorter, shallower, and less frequent. Gross domestic product (GDP) doubled and household net worth increased by 250 percent in real terms. Forty-seven million jobs were created.

This quarter-century boom strengthened as its length increased. Productivity growth surged by one full percentage point per year in the United States, creating an additional $9 trillion of goods and services that would never have existed. And the long boom went global, with emerging-market countries from Asia to Latin America to Africa experiencing the enormous improvements in both economic growth and economic stability.

Economic policies that place greater reliance on the principles of free markets, price stability, and flexibility have been the key to these successes. Recently, however, several powerful new economic forces have begun to change the economic landscape, and these principles are being challenged with far-reaching implications for U.S. economic policy, both domestic and international. A financial crisis flared up in 2007 and turned into a severe panic in 2008, leading to the Great Recession. How we interpret and react to these forces—and in particular whether proven policy principles prevail going forward—will determine whether strong economic growth and stability returns and again continues to spread and improve more people’s lives or whether the economy stalls and stagnates.

Our Working Group organizes seminars and conferences, prepares policy papers and other publications, and serves as a resource for policy makers and interested members of the public.

THE RESOLUTION PROJECT

When in 2009 Congress began considering financial reforms proposed by the US Treasury, a “resolution project” group was established, under the auspices of the Working Group on Economic Policy at the Hoover Institution at Stanford University, to focus on alternative ways to deal with failing financial institutions. The group’s original members were Andrew Crockett, Darrell Duffie, Richard Herring, Thomas H. Jackson, William F. Kroener III, Kenneth E. Scott, George P. Shultz, David A. Skeel Jr., Kimberly Anne Summe, and John B. Taylor.

The group held a number of meetings in the fall of 2009, which led to several papers and a conference in December 2009, the results of which were published in 2010 as Ending Government Bailouts As We Know Them, edited by Kenneth E. Scott, George P. Shultz, and John B. Taylor. The group continued to meet and work further on members’ analyses and proposals, and new members joined, including Simon Gleeson, Thomas F. Huertas, and Emily Kapur. A proposal for modified bankruptcy procedures to better handle the failure of large, nonbank financial institutions, called Chapter 14, was the result, and a second book, Bankruptcy Not Bailout: A Special Chapter 14, edited by Kenneth E. Scott and John B. Taylor, was published in 2012. This third book centers around a revised version of the proposal, called Chapter 14 2.0.