"System, power, and European monetary integration"

[From the Introduction]. Theories of international relations and comparative politics characterize the movement within Western Europe toward monetary integration primarily in regional terms. The global context within which European monetary integration is taking place is viewed in this literature as having little influence or influence which is only episodic, momentary, or ancillary to other, more primary forces. Regional political integration, regional economic interdependence, sectoral interests within European countries, and strategies of national executives and central bankers are instead given primary emphasis. This article argues, by contrast, that the international system has provided strong incentives for and greatly affected European monetary integration. Changes in and unpredictability of international monetary policies of the United States, in particular, have pushed European governments toward regional monetary integration at several critical historical junctures. Indeed, all of the major successes in monetary integration were closely, and causally, associated with transatlantic monetary conflict and the decline or weakness of the international monetary regime

Monetary policy and monetary reform: Irving Fisher's contributions to monetary macroeconomics

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An ever More Polarized Union: The Greek Problem and the Failure of EU Economic Governance. CES Open Forum Series #14 2018-2019

As the Greek economy continues on its downward trajectory, the policy debate has degenerated into a re-enactment of the neoclassics versus Keynesians controversy. Yet, the Greek crisis can be solved neither by more austerity and structural reforms nor by Keynesian reflation. The core problem lies in a form of integration that has systematically weakened the Greek economy while stabilizing a clientelistic mode of interest intermediation. In order to recover, Greece needs a substantial devaluation plus an interventionist industrial policy. Yet, such a form of integration is not palatable to the North West European creditor countries, nor is it attractive to the Greek government as it would require a break with the clientelistic organization of political power while removing the scapegoat of the EU

Aggregate liquidity shortages, idiosyncracic liquidity smoothing and banking regulation

This paper develops a model of banking fragility driven by aggregate liquidity shortages. Inefficiencies arise because liquidity smoothing across banks breaks down when there is such a shortage, causing unnecessary and value-reducing transfer of assets between banks. We find that a Lender of Last Resort policy is ineffective in restoring efficiency as it leads to offsetting changes in the banks’ supply of liquidity. In contrast, subsidizing the purchase of assets from troubled banks increases welfare by improving the banks’ liquidity holdings. The first best, however, is achieved by redistributing liquidity from healthy to troubled banks in a crisis

Macroeconomic Policy Coordination among the Industrial Economies

macroeconomics, policy coordination, industrial economy

The political economy of the Jospin government

This article explores the political economy of the French Socialist Party (PS), beginning with the neo-liberal U-turn of 1983. It then charts the re-evaluation of the PS's political economic foundations after the 1993 defeat, the rejection of the neo-liberal 'pensée unique', and the rehabilitation of a broadly Keynesian frame of reference. The article goes on to explore how this shift has fed through into the Jospin government's policy and positions at both the national and international level. It explores aspirations to reinvent the EU as a Keynesian social democratic 'policy space', and at the national level, employment, macroeconomic, and structural policies

The Macroeconomics of the Great Depression: A Comparative Approach

Recently, research on the causes of the Great Depression has shifted from a heavy emphasis on events in the United States to a broader, more comparative approach that examines the interwar experiences of many countries simultaneously. In this lecture I survey the current state of our knowledge about the Depression from a comparative perspective. On the aggregate demand side of the economy, comparative analysis has greatly strengthened the empirical case for monetary shocks as a major driving force of the Depression; an interesting possibility suggested by this analysis is that the worldwide monetary collapse that began in 1931 may be interpreted as a jump from one Nash equilibrium to another. On the aggregate supply side, comparative empirical studies provide support for both induced financial crisis and sticky nominal wages as mechanisms by which nominal shocks had real effects. Still unresolved is why nominal wages did not adjust more quickly in the face of mass unemployment.

In brief: Job guarantee: a new promise on long-term unemployment

Richard Layard and Paul Gregg call for a 'job guarantee' for jobseekers who have been out of work for 12 months or more