Monetary Policy before, During and After the Financial Crisis

Monetary Policy before, During the and After the Financial Crisi

Financial Crisis, Global Liquidity and Monetary Exit Strategies

We develop a roadmap of how the ECB should further reduce the volume of money (money supply) and roll back credit easing in order to prevent inflation. The exits should be step-by-step rather than one-off. Communicating about the exit strategy must be an integral part of the exit strategy. Price stability should take precedence in all decisions. Due to vagabonding global liquidity, there is a strong case for globally coordinating monetary exit strategies. Given unsurmountable practical problems of coordinating exit with asymmetric country interests, however, the ECB should go ahead - perhaps joint with some Far Eastern economies. Coordination of monetary and fiscal exit would undermine ECB independence and is also technically out of reach within the euro area

How Many Varieties of Capitalism? Comparing the Comparative Institutional Analyses of Capitalist Diversity

This essay reviews the development of approaches within the comparative capitalisms (CC) literature and points to three theoretical innovations which, taken together, define and distinguish these approaches as a group. First, national economies are characterized by distinct institutional configurations that generate a particular systemic 'logic' of economic action. Second, the CC literature suggests a theory of comparative institutional advantage in which different institutional arrangements have distinct strengths and weaknesses for different kinds of economic activity. Third, the literature has been interpreted to imply a theory of institutional path dependence. Behind these unifying characteristics of the literature, however, lie a variety of analytical frameworks and typologies of capitalism. This paper reviews and compares these different frameworks by highlighting the fundamental distinctions among them and drawing out their respective contributions and limitations in explaining economic performance and institutional dynamics. The paper concludes that the way forward for this literature lies in developing a more dynamic view of individual institutions, the linkages between domains, and the role of politics and power.In diesem Discussion Paper werden Ansätze der Comparative-Capitalism-Diskussion vorgestellt. Sie haben drei theoretische Innovationen gemein. Erstens: Nationale Ökonomien werden durch institutionelle Konfigurationen geprägt, die auf jeweils eigene "systemische Logiken" wirtschaftlichen Handelns hinwirken. Zweitens: Die Comparative-Capitalism-Literatur beinhaltet eine Theorie der komparativen institutionellen Vorteile, der zufolge institutionellen Konfigurationen spezifische Wettbewerbsvorteile zugeordnet werden können. Zudem, drittens, beinhaltet die Comparative-Capitalism-Literatur auch eine implizite Theorie der Pfadabhängigkeit. Trotz dieser Gemeinsamkeiten unterscheiden sich die Ansätze hinsichtlich analytischer Zugriffe und Vorschläge zur Typologisierung nationaler Kapitalismen. Beim Vergleich dieser Ansätze werden besonders deren Stärken und Schwächen bei der Analyse wirtschaftlicher Performanz und institutioneller Entwicklungsdynamiken hervorgehoben. Der Aufsatz kommt zu dem Schluss, dass die Comparative-Capitalism-Literatur in dreierlei Hinsicht der Weiterentwicklung bedarf: hinsichtlich einer dynamischeren Modellierung von Institutionen, einem besseren Verständnis der Interaktion institutioneller Domänen und der Berücksichtigung von Macht und Politik in der Analyse von Produktionsregimen

Is the Global Economy Headed for a Lost Decade? A European Perspective

In the 15 years leading up to the recent crisis, the world economy's exceptional performance was driven by globalisation, rapid, export-driven growth in emerging markets, debt-fuelled consumption in major advanced economies, and a benign financial and macroeconomic environment. These, however, sowed the seeds for the financial crisis by creating unsustainable imbalances and distortions. Obstacles to future growth are likely to be retrenchment in consumption, dampened investment, and unsustainable fiscal balances. Going forward, there must be a renewed commitment to medium-term, rule-based, policies for maintaining fiscal sustainability, price stability, and financial stability. The international imbalances between savings and consumption must also be addressed through a global reform agenda discussed in the paper. Even with reform, the challenges to growth will be daunting. Without reform, however, it is likely that the global economy will suffer a lost decade.