Stagnation policy in the Eurozone and economic policy alternatives

Eckhard Hein

No 05-2017, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Empirically, the macroeconomic institutions and the macroeconomic policy approach in the Eurozone have failed badly, both in terms of preventing the global financial and economic cri-sis from becoming a euro crisis and in generating a rapid recovery from the crisis, in particular. In this paper I will argue that the dominating macroeconomic policy regime in the Eurozone can be seen as a version of what Steindl (1979) had called ?stagnation policy?. To underline this argument, I will provide a simple Steindlian distribution and growth model in order to identi-fy the main channels through which stagnation policy affects accumulation and productivity growth. This will also provide a set of elements of a Steindlian anti-stagnation policy. Against this theoretical background I will then examine the macroeconomic institutions and the macro-economic policy approach of the Eurozone which has been based on the New Consensus Macroeconomics (NCM) and I will highlight its main deficiencies. This will then provide the grounds for an outline of an alternative macroeconomic policy approach for the specific institu-tional setup of the Eurozone based on a post-Keynesian/Steindlian/neo-Kaleckian approach.

Keywords: stagnation; stagnation policy; Eurozone; policy alternatives; Steindl (search for similar items in EconPapers)
JEL-codes: E02 E11 E12 E61 E63 E64 E65 F45 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2017
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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