Eckhard Hein Book order

The current economic crisis, the most severe since the Great Depression, is reshaping macroeconomic policies. Just months ago, leading institutions endorsed laissez-faire approaches and viewed inflation targeting as essential for monetary policy. Now, they advocate for bank recapitalization, unconventional monetary strategies, and counter-cyclical fiscal measures. The mainstream economic policy framework, known as the New Neoclassical Synthesis or New Consensus Model (NCM), relies on utility-maximizing agents with rational expectations within a dynamic stochastic general equilibrium (DSGE) context. However, this model has faced longstanding criticism from Keynesian and Post-Keynesian scholars, who argue it is ill-equipped to address the current financial and economic turmoil. This raises questions about the future of economic theory and policy: Will the mainstream perspective endure with minor adjustments, or can it evolve to incorporate alternative views? Are heterodox approaches, particularly Post-Keynesian ones, prepared to engage with and influence current challenges? The chapters explore these themes, offering insights into the limitations of NCM, the role of government in fiscal policy, and the implications of behavioral economics, among other topics. This discourse aims to illuminate the path forward for macroeconomics and its policy applications.

During the recent decades the financial sectors of developed and developing countries have changed remarkably. There has been a major increase in the degree of financial intermediation, and new financial instruments, triggered by national and international legal liberalisation and by the development of communication technologies, have been developed. The overall importance of financial factors for real investment and growth of non-financial business has risen. Finally, the power of shareholders in joint stock companies seems to have increased vis-à-vis management and labourers. These and other changes as well as their effects on the macro-economy require deeper investigation, in particular since the US sub-prime mortgage crisis has been spreading over international financial markets and has already affected real development in the negative.

Despite recent growth and rising employment in the EU, European integration faces significant challenges. The economic performance of the EU, particularly the Euro area, has fallen behind that of the USA and other global regions. Additionally, economic divergence among EMU member countries poses serious issues, exacerbated by the inclusion of Middle and Eastern European nations, which has increased both nominal and real differences. The EU's ability to address these disparities and the existing trends of divergence among older member states remains uncertain. This collection explores theoretical, empirical, and political dimensions of European integration. It includes a critical examination of optimum currency area theory and the implications of the Maastricht Regime. The analysis covers monetary, fiscal, and wage policies, along with their coordination within a monetary union. Country-specific studies further enrich the discussion. Key topics include macroeconomic policy analysis in Germany, lessons from the Euro-zone, Keynesian interpretations of optimal currency areas, and the challenges of economic divergence in the Euro area. Contributions also address the coordination of macroeconomic policies, inflation differentials in EMU, and the European Central Bank's effectiveness, questioning the sustainability of the current economic framework.

Since the mid-1990s, Euro area countries have faced slow growth and high unemployment, particularly since the growth slowdown in 2001. The sole achievement of European monetary integration has been a significant reduction in inflation, which, however, has led to deflation risks in some member states, especially Germany. Economic policy actors in Europe have largely responded to these challenges by advocating for further structural reforms in the labor market and social benefit systems, continuing a strategy pursued for over 25 years to boost potential growth and reduce structural unemployment. Monetary and fiscal policies have been deprioritized to maintain a stable environment characterized by stable prices and low inflation expectations. In Germany, the situation appears even more dire, with mainstream advisers often denying the short-term effects of macroeconomic policies. This volume presents critical perspectives on orthodox analyses and mainstream economic policies, exploring alternative approaches to enhance growth and reduce unemployment. It includes assessments of the causes of slow growth, issues related to EU enlargement, and discussions of alternative economic policy concepts. The papers address various topics, including demand neglect in the Euro area, the European fiscal framework, and the implications of the Stability and Growth Pact.

In den neunziger Jahren dominierte in Europa ein neu-monetaristisches ökonomisches Paradigma, das die Architektur der Europäischen Währungsunion prägte. Unabhängige Zentralbanken sollten sich ausschließlich auf die Preisniveaustabilität konzentrieren, während Fiskalpolitik als langfristig ineffektiv galt und strengen Konsolidierungsregeln unterworfen werden musste. Die Arbeitslosigkeit wurde als angebotsseitig durch Arbeitsmarktstrukturen bestimmt. In jüngerer Zeit zeigt sich jedoch ein Wandel: In den USA wenden sich sowohl die akademische Gemeinschaft als auch die wirtschaftspolitische Praxis zunehmend dem Neu-Keynesianismus zu. Dies wirft die Frage auf, ob sich ein neuer wirtschaftspolitischer Mainstream entwickelt, der eine interventionistischere Ausrichtung verfolgt. Kann dieser Mainstream das neu-monetaristische Paradigma in Deutschland und Europa ablösen und aktiv gegen Arbeitslosigkeit und Wachstumsschwäche vorgehen? Die Aufsätze des Sammelbandes bieten Antworten auf diese Fragen. Die Themen reichen von einer kritischen Würdigung des Neu-Keynesianismus über die Analyse der NAIRU-Theorie bis hin zu einem Vergleich von Post-Keynesianismus und Neu-Keynesianismus. Zudem wird die deutsche wirtschaftspolitische Debatte beleuchtet, die unter der Missachtung des Neu-Keynesianismus leidet, und der dritte Weg als politische Theorie diskutiert.