What Would Keynes Have Thought of the European Crisis?

Jan Kregel

Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, 2017, vol. 51, issue 2, 107-120

Abstract: Keynes died before the initiation of measures for economic and political union in Europe. However, he did have very clear views about the limitations on national policy space of an international standard which apply pari passu to the single European currency and to the problems created by international capital flows which have been part of the movement to a Single European market. At the same time, his proposal for an International Clearing Union, which was rejected in favour of the US proposl for a International Stabilisation Fund at Bretton Woods, provided the framework for one of the most important institutions in European Recovery proposed under the US Marshall Plan: the European Payments Union. Richard Kahn, one of Keynes collaborators put forward a regional version of the Keynes Plan, the ‘Discount Scheme’ which provides an indication of how Keynes might have evaluated the EPU. Based on Kahn’s proposal, a possible modern application of Keynes’s ideas on a sub-regional level is proposed as a means of avoiding the drawbacks Keynes noted of a single currency with open capital markets.

Keywords: Keynes Clearing Union; Kahn’s Discount Scheme; European Payments Union; Regional Payments Systems; European Reconstruction (search for similar items in EconPapers)
JEL-codes: F33 N24 N94 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:fle:journl:v:51:y:2017:i:2:p:107-120

DOI: 10.26331/1017

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