Keyword: Monetary policy

Gunther Schnabl; Sebastian Müller

Abstract

The paper analyzes the effects of the increasingly expansionary monetary policies on the economic order in Europe and the European integration process. It is argued that a liberal market order and a tight monetary policy stance shaped in postwar Germany and in United Kingdom have long served as cornerstones for growth, prosperity and social cohesion in Europe. A prolonged loose monetary policy stance of the European Central Bank has undermined these orders, thereby diminishing productivity gains and growth. Combined with negative distribution effects, those monetary policies constitute the breeding ground for divergence forces in the European Union as heralded by the Brexit.

Keywords: Brexit, divergence, economic order, European Integration, Friedrich August von Hayek, inequality, Ludwig Erhard, Margret Thatcher, Monetary policy, political polarization.

JEL Codes: B25; E58; E65.

Erschienen in

The Economists’ Voice, 16(1).

Download

via Degruyter

Pablo Duarte; Gunther Schnabl

Abstract

Voters in the industrialised countries are increasingly expressing dissatisfaction by dissenting from the established political parties and candidates. Based on the concepts of justice by Hayek, Rawls and Buchanan, we argue that the growing dissatisfaction is rooted in the asymmetric pattern of monetary policies since the mid-1980s for two reasons. First, the structurally declining interest rates and the unconventional monetary policy measures have granted privileges to specific groups. Second, the increasingly expansionary monetary policies have negative growth effects, which have reduced the scope for compensation of the ones excluded from the privileges. As a result, the acceptance of the prevailing economic and political order is undermined and political instability increases.

Keywords: Buchanan, economic order, Hayek, inequality, Monetary policy, political instability, privileges, Rawls.

Erschienen in

The World Economy, 42(2), 2019, 614-634.

Download

via Wiley

David Herok; Gunther Schnabl

Abstract

Während die Arbeitslosigkeit in Europa stetig sinkt und immer weniger Unternehmen Insolvenz anmelden, wächst im Schatten der anhaltenden Flut des billigen Geldes durch die EZB die Anzahl von sogenannten Zombie -Banken, Zombie-Unternehmen und Zombie Staaten. Diese Entwicklung erinnert an eine Rückkehr zu planwirtschaftlichen Strukturen und erschwert den Ausstieg aus der sehr lockeren Geldpolitik. Nur ein Ausstieg kann jedoch entscheidend der fortschreitenden Zombiefizierung Einhalt zu gebieten, die die marktwirt-schaftlichen Prinzipien unterhöhlt, das Wachstum lähmt und den sozialen Frieden stört.

While unemployment and bankruptcies in Europe are steadily on decline, the number of so-called zombie banks, zombie companies and zombie states is growing in the shadow of the ECB's persistent ultra-easy monetary policy. This development is reminiscent of a return to planned economic structures and makes it much more difficult to exit from the very loose monetary policy. However, an exit is crucial to halting the zombification process which un-dermines free-market principles and growth, and disrupts social peace.

Keywords: Bank Regulation, ECB, Hayek, Interest Rates, Joseph Schumpeter, Monetary policy, Resource Allocation in Planning Economies, Zombie-Firms, Zombie-Lending.

JEL Codes: B31, E58, G28.

Erschienen in

Austrian Institute Paper 21 (2018).

Download

Via SSRN

Raphael Fischer; Gunther Schnabl

Abstract

Both Japan and parts of the European Monetary Union have experienced boom and bust in stock and real estate markets, which have been followed by a lasting crisis. The paper analyses the role of a high degree of regional heterogeneity for public debt and monetary policy in the context of crisis. It is shown for Japan that the attempts to maintain regional cohesion via a regional transfer mechanism has contributed to the unprecedented rise in public debt and persistent monetary expansion. Econometric estimations show that in Japan regional redistribution of funds has ensured homogeneous living conditions across Japanese regions pre- and post-crisis. The side condition is monetary expansion. A similar effect could emerge in Europe, if the crisis persists.

Keywords: EMU Crisis, Japan, Monetary policy, Public debt, Regional redistribution.

JEL Codes: H20, H50, H70.

Erschienen in

International Economics and Economic Policy (April 2018), Volume 15, Issue 2, pp 405–428.

Download

via SpringerLink

Pablo Duarte; Gunther Schnabl

Abstract

Since a series of crisis events after 2007, the discussion about the adjustment channels of current account imbalances has been revived. We discuss the effectiveness of exchange rates versus macroeconomic policies to rebalance current accounts for a set of 86 mainly emerging market economies. We find that nominal exchange rates are not a sufficient adjustment channel for (unsustainable) current account positions. Instead, depending on the region, monetary and/or fiscal policies are the main determinants of current accounts. For East Asia and the oil exporting countries sterilization policies, i.e. relatively tight monetary policies, are the main determinants. In contrast the main driving forces for emerging and southern Europe are fiscal policy stances. Only for the Latin American countries the exchange rate seems to play a significant role.

Keywords: exchange rate adjustment, fiscal policy, global imbalances, intra-european imbalances, Monetary policy.

JEL Codes: E42, F31, F43.

Erschienen in

Review of Development Economics, Volume 19, Issue 3, pp 531-544.

Download

Via Wiley Online Library