Policies to overcome stagnation: the crisis, and the possible futures, of all things euro

Mark Blyth
Additional contact information
Mark Blyth: The Watson Institute for International and Public Affairs, Brown University, Providence, RI, USA

European Journal of Economics and Economic Policies: Intervention, 2016, vol. 13, issue 2, 215-228

Abstract: This article argues that the Europe's continuing economic underperformance, particularly in the eurozone, is neither a function of insufficient information (policymakers do not know the right policies) nor ideology (policymakers are unable to recognize the right policies due to ideological priors). Rather, this article places the continuation of policies that cause stagnation in a longer historical context. Building upon the insights of Kalecki (1943) regarding the political limits of full employment policies, it is argued that the shift from a regime that generated inflation, low profitability, and a high degree of equality to one that generates deflation, high profitability, and inequality has hamstrung the ability of policymakers to respond positively to the situation at hand. This has generated structural pressures for political realignment across cases that compound the economic problems of stagnation while exacerbating tensions between different European ‘Varieties of Capitalism.’ The result is a set of ‘second-best’ strategies that lead to second-best outcomes in both politics and economics that further stress the already stressed economies and polities of Europe.

Keywords: stagnation; economic policy; eurozone; Kalecki; regime change; populism; varieties of capitalism; macroeconomic imbalances (search for similar items in EconPapers)
JEL-codes: B20 E00 F00 N00 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.elgaronline.com/view/journals/ejeep/13-2/ejeep.2016.02.06.xml (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:13:y:2016:i:2:p215-228

Access Statistics for this article

European Journal of Economics and Economic Policies: Intervention is currently edited by Torsten Niechoj

More articles in European Journal of Economics and Economic Policies: Intervention from Edward Elgar Publishing
Bibliographic data for series maintained by Phillip Thompson ().