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Stagnation policy in the Eurozone and economic policy alternatives: A Steindlian/neo-Kaleckian perspective

Eckhard Hein

No 10/17, Working Papers from Sapienza University of Rome, DISS

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 crisis 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 identify 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 macroeconomic 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 institutional 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)
New Economics Papers: this item is included in nep-mac and nep-pke
Date: 2017-06
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