cutting-edge insights and practical guidance for professionals in the areas of economics, politics, public policy and public administration, and those working at international organizations. The series features concise and accessible... more
cutting-edge insights and practical guidance for professionals in the areas of economics, politics, public policy and public administration, and those working at international organizations. The series features concise and accessible books on the latest developments in governance, organizational and political strategies, institutional policies, policy instruments, public management, and finance. Leadership and digitalization issues are a core topic throughout the series. All volumes are written by practitioners, experts and leading authorities from think tanks, non-governmental organizations, and public and international organizations. While the books are explicitly intended for professionals in the above-mentioned fields, students of economics, political science, public policy and public administration will also benefit from these practical guides for their future careers.
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In diesem Buch geht es um die Makroökonomik, um Geldschöpfung und-vernichtung, Vollbeschäftigung, Preisstabilität und nachhaltige Ressourcenbewirtschaftung. Dabei wird mikrofundiert mit einem Bilanzansatz die Geldschöpfung der Banken,... more
In diesem Buch geht es um die Makroökonomik, um Geldschöpfung und-vernichtung, Vollbeschäftigung, Preisstabilität und nachhaltige Ressourcenbewirtschaftung. Dabei wird mikrofundiert mit einem Bilanzansatz die Geldschöpfung der Banken, Nichtbanken, Zentralbanken und der Bundesregierung vorgestellt und ihr Zusammenspiel im Wirtschaftskreislauf erklärt. Der gewählte Ansatz beinhaltet die neuesten Erkenntnisse und auch aktuelle Entwicklungen wie Sondervermögen, TARGET2-Salden und Energiepreisinflation. Fallstudien und anwendungsbezogene Beispiele zeigen praxisnah, wie privater, staatlicher Sektor und der Rest der Welt auf der gesamtwirtschaftlichen Ebene miteinander interagieren. Mithilfe einfacher Verhaltensannahmen können die Interaktionen in einem grafischen Modell nachvollzogen werden, in welchem konjunkturelle Schwankungen genauso wie wirtschaftspolitische Maßnahmen der Geld-und Fiskalpolitik simuliert werden können. Ein besonderer Schwerpunkt liegt dabei auf Deutschland und der Eurozone. Kapitel zu Beschäftigung und Inflation sowie Deflation runden das Buch ab.
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What impact does Modern Money Theory (MMT) have on the different dynamics toward a new (European) strategy of sustainability? The paper discusses the impact on the public, policy makers, central bankers, academics (both economists and... more
What impact does Modern Money Theory (MMT) have on the different dynamics toward a new (European) strategy of sustainability? The paper discusses the impact on the public, policy makers, central bankers, academics (both economists and noneconomists), and students of economics. Being an empirical monetary theory, MMT cannot be “applied“, but builds on existing institutions. All recommendations are easi to implement. That makes the MMT, Ehnts argues, a powerful instrument to address the problems of our day.
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Dieses essential erläutert, wie Zentralbanken, Banken und Regierungen Geld schöpfen. Bei modernem Geld handelt es sich letztlich um eine Steuergutschrift, die der Staat über seine Zentralbank als Monopolist ausgibt. Daher gibt es kein... more
Dieses essential erläutert, wie Zentralbanken, Banken und Regierungen Geld schöpfen. Bei modernem Geld handelt es sich letztlich um eine Steuergutschrift, die der Staat über seine Zentralbank als Monopolist ausgibt. Daher gibt es kein „Steuerzahler-Geld“ (Thatcher 1983) und „Staatsschulden“ sind lediglich Geld im Besitz der Bürger*innen, welches für spätere Steuerzahlungen verwendet werden kann. Preisstabilität, Vollbeschäftigung und nachhaltige Ressourcennutzung ergeben sich nicht von allein. Der Einsatz von Wirtschaftspolitik zur Erreichung dieser Ziele wird beschrieben.
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This book provides a new methodological approach to money and macroeconomics. Realizing that the abstract equilibrium models lacked descriptions of fundamental issues of a modern monetary economy, the focus of this book lies on the... more
This book provides a new methodological approach to money and macroeconomics. Realizing that the abstract equilibrium models lacked descriptions of fundamental issues of a modern monetary economy, the focus of this book lies on the (stylized) balance sheets of the main actors. Money, after all, is born on the balance sheets of the central bank or commercial bank. While households and firms hold accounts at banks with deposits, banks hold an account at the central bank where deposits are called reserves. The book aims to explain how the two monetary circuits – central bank deposits and bank deposits – are intertwined. It is also shown how government spending injects money into the economy.
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Die Theorie von Geld und Kredit stand in den letzten Jahren so stark im Mittelpunkt wie lange nicht mehr. Das Zusammenspiel der Zentralbank, die Zentralbankgeld oder auch Reserven schöpft, mit den Geschäftsbanken, die ihrerseits Giralgeld... more
Die Theorie von Geld und Kredit stand in den letzten Jahren so stark im Mittelpunkt wie lange nicht mehr. Das Zusammenspiel der Zentralbank, die Zentralbankgeld oder auch Reserven schöpft, mit den Geschäftsbanken, die ihrerseits Giralgeld oder auch Einlagen schöpfen, ist zentral für €-päische Themen rund um das Zahlungssystem TARGET2, quantitative easing, lender of last resort, LTROs, die Verzinsung der Staatsanleihen und die Zinssetzung der EZB mit den seit jüngstem negativen Einlagezinsen für die Geschäftsbanken. In dieser Veröffentlichung werden Geld und Kredit mithilfe einer bilanziellen Betrachtung erklärt. Es werden die sogenannten T-Konten, welche Forderungen und Verbindlichkeiten abbilden, für die wichtigsten Akteure erklärt. Wie schöpft eine Zentralbank Geld? Wie vergibt eine Geschäftsbank einen Kredit, und braucht sie dazu eine Ersparnis? Wie begibt der Staat eine Staatsanleihe, wo hat er sein Konto und was bedeutet das für die T-Konten der anderen Akteure? Die gewählte Methodologie ermöglicht ein Verständnis der wesentlichen bilanziellen Zusammenhänge einer Volkswirtschaft und bietet dadurch eine alternative Sicht auf die €-päischen Themen. So folgt auf die Vorstellung der modernen Geldtheorie ein kurzes makroökonomisches Modell, welches auf den geldtheoretischen Erkenntnissen beruht. Dieses wird in der Folge auf die Eurozone angewandt. Durch die Analyse wird deutlich, dass die Probleme mit der Staatsverschuldung nicht der Auslöser, sondern eine Folge der aktuellen Krise sind. Grundlegendes Problem für den Wirtschaftskreislauf sind die Spätfolgen der Immobilienkrisen in Spanien und Irland. Während vor Einführung des Euros weder Regierungen noch Zentralbanken in die Insolvenz gehen konnten, wurde dies durch die sogenannte „no bail-out“-Klausel aufgehoben. Nun entscheiden Finanzmärkte oder die Troika darüber, ob ein Haushalt einer durch ein demokratisches Votum legitimierten Regierung eines Nationalstaats genehmigt wird oder nicht. Diese Entmündigung der Demokratie ist nicht nur ethisch fragwürdig, sondern auch makroökonomisch unsinnig. Im letzten Teil des Buches werden die möglichen Schritte diskutiert, um Europa wieder aus der Krise zu führen.
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Multinational firms have been at the center of trade theory since the 1980s. Their role in the world economy changed with the rise of globalization. Vertical and horizontal foreign direct investment would occur in order to maximize firm... more
Multinational firms have been at the center of trade theory since the 1980s. Their role in the world economy changed with the rise of globalization. Vertical and horizontal foreign direct investment would occur in order to maximize firm profits. It was further assumed that they would disseminate knowledge and technology spillovers, as predicted by the Endogenous Growth Theory. However, the empirical literature on spillovers from foreign direct investment is inconclusive. It is argued here that input/output linkages are an important determinant of industry location.
The general idea of this work is to provide a theoretical structure for thinking about how multinational enterprises influence domestic firms in the host country. This is achieved by extending the linear footloose capital model. Spillovers and linkages are added to the model, which is then modified to run simulations. With these simulations it is possible to validate the linear footloose capital model. Its ex-post predictions are compared to real world data. Two scenarios are treated: The case of Argentina and Brazil in Mercosur, and that of Nordic and Baltic countries in the European Union.ictions are compared to real world data. Two scenarios are treated: The case of Argentina and Brazil in Mercosur, and that of Nordic and Baltic countries in the European Union.
The general idea of this work is to provide a theoretical structure for thinking about how multinational enterprises influence domestic firms in the host country. This is achieved by extending the linear footloose capital model. Spillovers and linkages are added to the model, which is then modified to run simulations. With these simulations it is possible to validate the linear footloose capital model. Its ex-post predictions are compared to real world data. Two scenarios are treated: The case of Argentina and Brazil in Mercosur, and that of Nordic and Baltic countries in the European Union.ictions are compared to real world data. Two scenarios are treated: The case of Argentina and Brazil in Mercosur, and that of Nordic and Baltic countries in the European Union.
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The demise of Silicon Valley Bank (SVB) has reminded us of the financial crises of the past. While during the global financial crisis credit risk was the problem, banks are now hit with interest rate risk. SVB seems to have ignored basic... more
The demise of Silicon Valley Bank (SVB) has reminded us of the financial crises of the past. While during the global financial crisis credit risk was the problem, banks are now hit with interest rate risk. SVB seems to have ignored basic principles of risk management, as an increase in interest rates was bound to happen sooner or later. The episode nevertheless has reopened the debate of how to regulate banks and how to run macroeconomic policy. It seems that fiscal policy will replace monetary policy once again as the major instrument with which to stabilise the economy.
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This paper responds to a presentation and paper published by Marc Lavoie that summarizes points of agreement and disagreement between Modern Money Theory (MMT) and Post Keynesians more generally. In particular, we examine MMT’s view on... more
This paper responds to a presentation and paper published by Marc Lavoie that summarizes points of agreement and disagreement between Modern Money Theory (MMT) and Post Keynesians more generally. In particular, we examine MMT’s view on the conditions required for monetary sovereignty and apply that to the evolution of the conditions in the Euro area. We conclude that while there was a problem with the original set-up of the Euro system, this has been resolved in the aftermath of the global financial crisis and the more recent COVID pandemic. The Euro area's institutions allow some flexibility, allowing national governments to act as unconstrained currency issuers in times of crisis. The ECB's role of dealer of last resort for government bonds has made this possible, together with the general escape clause in the Stability and Growth Pact that was inserted in 2011 and allows to shut down the excessive deficit procedure which is the major constraint of the fiscal framework. We with Marc Lavoie that the fiscal framework is the real constraining factor explaining the weak macroeconomic performance. Finally, we address a few remaining misunderstandings over the MMT position on so-called ‘consolidation’ and on external constraints facing monetarily sovereign nations.
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In this paper, we discuss the balance sheet mechanics of the Swedish government. We examine spending, government bond purchases, and tax payments. As long as the Swedish central bank, which is created through Swedish laws, supports the... more
In this paper, we discuss the balance sheet mechanics of the Swedish government. We examine spending, government bond purchases, and tax payments. As long as the Swedish central bank, which is created through Swedish laws, supports the Swedish central government, it cannot run out of money. The Swedish government therefore plays a large role in the Swedish economy. It can and should target full employment and price stability, bringing to bear its fiscal power.
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Zusammenfassung Die Modern Monetary Theory (MMT) ist nicht zuletzt durch die hohen Defizite und Staatsschulden in der Folge der Corona-Pandemie populär geworden. In diesem Beitrag erklären wir die empirische Theorie, die vor allem die... more
Zusammenfassung Die Modern Monetary Theory (MMT) ist nicht zuletzt durch die hohen Defizite und Staatsschulden in der Folge der Corona-Pandemie populär geworden. In diesem Beitrag erklären wir die empirische Theorie, die vor allem die Funktionsweise des Geldsystems beschreibt. Die MMT macht deutlich, dass staatliche Ausgaben nicht „finanziert“ werden können, weder durch Steuern noch durch Staatsanleihen. Sämtliche Zahlungen erfolgen vielmehr durch das Kreditieren eines Kontos einer Bank bei der jeweiligen Zentralbank. Die Zentralbanken agieren als Hausbank des Staates – auch in der Eurozone. Politische Regeln können die Staatsausgaben zwar beschränken, doch ist der Staat als Schöpfer des Geldes maßgeblich für die Höhe der Beschäftigung verantwortlich und kann mit einer Jobgarantie Vollbeschäftigung erreichen.
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The demise of Silicon Valley Bank (SVB) has reminded us of the financial crises of the past. While during the global financial crisis credit risk was the problem, banks are now hit with interest rate risk. SVB seems to have ignored basic... more
The demise of Silicon Valley Bank (SVB) has reminded us of the financial crises of the past. While during the global financial crisis credit risk was the problem, banks are now hit with interest rate risk. SVB seems to have ignored basic principles of risk management, as an increase in interest rates was bound to happen sooner or later. The episode nevertheless has reopened the debate of how to regulate banks and how to run macroeconomic policy. It seems that fiscal policy will replace monetary policy once again as the major instrument with which to stabilise the economy.
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In the aftermath of the great financial crisis (GFC) a consensus has formed that economics needs to be reinvented, and most especially macroeconomics. In this article, a first lecture of macroeconomics provides students with a sound... more
In the aftermath of the great financial crisis (GFC) a consensus has formed that economics needs to be reinvented, and most especially macroeconomics. In this article, a first lecture of macroeconomics provides students with a sound foundation. Using a graphical model we demonstrate that when net expenditures increase, the world economy expands with rising employment; and when net expenditures slow, so does the world economy. At the margin, expenditures can only be increased by injections of net deposits created by an increase in debt. Concluding this first lecture, students take away the insight that (rising) expenditures and debt are necessary for the world economy to grow, and that both the rate of unemployment and the rate of inflation are correlated to the change in debt.
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Mainstream economics, it has turned out, has been wrong about public deficits, public debt and fiscal policy in general. Modern monetary theory has proven to be reliable and should replace the ideas that have failed in the pandemic.
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... reviews are a history of his own making, describing a research strategy that we name (for ... have had to share his prize with, for example, Elhanan Helpman or Avinash Dixit, if it had been based purely on his work on trade theory, or... more
... reviews are a history of his own making, describing a research strategy that we name (for ... have had to share his prize with, for example, Elhanan Helpman or Avinash Dixit, if it had been based purely on his work on trade theory, or maybe with Masahisa Fujita, Tony Venables or ...
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Research Interests: Economics, Humanities, Political Science, Applied Economics, Public Spending and the Deficit, and 8 morePublic Debt, Public Policy and Administration, Public Administration and Policy, Tax Credits, Chartalism, Public Deficit/Debit, Finance and Investment Banking Area, and Finance and Investment Banking
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Die Covid-19-Pandemie und die russische Invasion in der Ukraine haben, zusammen mit dem Bericht des Weltklimarats im April 2022, die Welt verändert. Um die globalen Probleme des 21. Jahrhunderts lösen zu können, müssen wir einen frischen... more
Die Covid-19-Pandemie und die russische Invasion in der Ukraine haben, zusammen mit dem Bericht des Weltklimarats im April 2022, die Welt verändert. Um die globalen Probleme des 21. Jahrhunderts lösen zu können, müssen wir einen frischen Blick auf die Welt werfen. Aus der Vogelperspektive betrachtet bewegen sich Geld und Ressourcen in zwei getrennten Kreisläufen, die miteinander verquickt sind. In diesem Beitrag möchten wir ich den Stand des Jahres 2022 bezüglich dieser beiden Kreisläufe analysieren. Dazu werden wir mit einem Fokus auf die Länder der Eurozone zunächst die jüngere Entwicklung der beiden Kreisläufe und ihrer politischen Ausgestaltung skizzieren (Abschnitt 1 & 2). Im Anschluss legen wir dar, welche spezifischen Funktionen dem Staat im Geld- und Güterkreislauf zukommen (Abschnitt 3). Dabei gehen wir insbesondere auf die Möglichkeiten und Grenzen von Geld- und Fiskalpolitik im Zusammenhang mit den gegenwärtigen Krisen ein und plädieren für ein neues, realistischeres Verständnis ihrer Zuständigkeiten (Abschnitt 4). Abschnitt 4 bettet die vorangegangenen Betrachtungen in den Kontext der Weltwirtschaft ein und setzt sich kritisch mit der deutschen Außenhandelspolitik auseinander. Abschließend resümieren wir, welche Ausrichtung der Wirtschaftspolitik unserem Verständnis nach zur Krisenbewältigung geboten ist.
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In the November/December 2021 issue of Intereconomics, Françoise Drumetz and Christian Pfister examine Modern Monetary Theory (MMT) and approach it from the policy consequences that would follow. This paper is a reply to Drumetz and... more
In the November/December 2021 issue of Intereconomics, Françoise Drumetz and Christian Pfister examine Modern Monetary Theory (MMT) and approach it from the policy consequences that would follow. This paper is a reply to Drumetz and Pfister. It restates the core of MMT and offers some suggestions for central banks. Theories are explanations of what we see, and MMT describes money creation and destruction. Hence, MMT cannot be and is not a political manifesto. In contrast to most other theories of money, MMT is falsifiable in its core statements, which are based on a balance sheet approach to macroeconomics. Since many central banks already educate the public about the creation of modern money through bank lending, it would be most welcome if they would do the same for the creation of modern money through government spending. Here, MMT and central bankers can find common ground to move forward and leave the theory of loanable funds and that of the money multiplier behind.
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In the aftermath of the Great Financial Crisis the world economy shows reduced economic growth, a renewed rise in inequality and partly a fall in private sector debt. The three issues seem to be intertwined. It is shown how in a... more
In the aftermath of the Great Financial Crisis the world economy shows reduced economic growth, a renewed rise in inequality and partly a fall in private sector debt. The three issues seem to be intertwined. It is shown how in a theoretical framework that builds on the sectoral balances they affect the macroeconomy. An increase in credit creation neutralizes the adverse growth effects of regressive redistribution until the financial situation becomes impossible to validate. In a tight sectoral accounting framework, the necessary policies given the de-leveraging needs of the private sector are few. They are discussed with a view on the world economy. It seems that more public spending, redistribution and financial default through another financial crisis are the only options left on the table when the goal is economic growth that does not depend on increasing private sector financial debt.
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More and more often, confidence in the professional qualifications of individuals representing certain occupational groups which formerly were held in high esteem has started to erode. Dismissing scientific evidence and ignoring expert... more
More and more often, confidence in the professional qualifications of individuals representing certain occupational groups which formerly were held in high esteem has started to erode. Dismissing scientific evidence and ignoring expert opinion has become a feature of political discourse around alternative truth. In part this is self-inflicted as various statements that are publicized with the aura of academic certainty do not stand up to closer scrutiny. Alas, this applies particularly to economics, which is often held up as the supreme discipline of social sciences. It suffices to take a look on page one of reasonably respectable printed media to recognize how important economics is in contemporary society. In this chapter, we highlight some issues from micro- and macroeconomics that are critical.
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Analytischer Ausgangspunkt der MMT ist die Tatsache, dass der Staat das Wahrungsmonopol besitzt. Dieses ermoglicht ihm, die zur Erfullung der staatlichen Aufgaben benotigten Ressourcen aus dem Privatsektor zu mobilisieren. Uber die Hohe... more
Analytischer Ausgangspunkt der MMT ist die Tatsache, dass der Staat das Wahrungsmonopol besitzt. Dieses ermoglicht ihm, die zur Erfullung der staatlichen Aufgaben benotigten Ressourcen aus dem Privatsektor zu mobilisieren. Uber die Hohe der Staatsausgaben und die Hohe der Steuern entscheidet der Staat uber das Ausmas der unfreiwilligen Arbeitslosigkeit. Daraus lasst sich die Forderung nach einer staatlichen universellen Jobgarantie herleiten. Die okonomischen Implikationen der Jobgarantie betreffen unter anderem die Konjunktursteuerung, die Preisstabilitat, die Kaufkraft der Wahrung sowie die Ausenwirtschaft. Die sozial-gesellschaftlichen Implikationen beziehen sich auf die sozialen und psychologischen Kosten, die mit unfreiwilliger Arbeitslosigkeit assoziiert werden, die Wirkungen auf die Arbeitsbedingungen im privaten Arbeitsmarkt, auf die mogliche Korrektur der Krafteverteilungen zwischen ArbeitgeberInnen und ArbeitnehmerInnen sowie auf demokratierelevante Aspekte.
Mariana Mazzucato, well-known for her 2013 The Entrepreneurial State, has written a new book in which she urges readers to rethink the capacities and the role of government. The centerpiece of her ‘Moonshot Guide’ is the USA Apollo space... more
Mariana Mazzucato, well-known for her 2013 The Entrepreneurial State, has written a new book in which she urges readers to rethink the capacities and the role of government. The centerpiece of her ‘Moonshot Guide’ is the USA Apollo space program started in the early 1960s, which resulted in successfully putting two men on the moon.
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Democratizing the Economics Debate by: Carlo D’Ippoliti
Published 2020
by Routledge
3 Park Square, Milton Park, Abingdon OX14 4RN, Oxfordshire, UK, 106pp
ISBN: 9780367342012 (hardcover)
Published 2020
by Routledge
3 Park Square, Milton Park, Abingdon OX14 4RN, Oxfordshire, UK, 106pp
ISBN: 9780367342012 (hardcover)
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Adair Turner is widely respected in academia and the central banking community; his word therefore carries a lot of weight and his triple attack on conventional wisdom must be taken seriously. His book is a grand tour through the... more
Adair Turner is widely respected in academia and the central banking community; his word therefore carries a lot of weight and his triple attack on conventional wisdom must be taken seriously. His book is a grand tour through the economics discipline rather than a detailed analysis with a claim to completeness. Turner proceeds chapter by chapter dismantling dominant political ideology and the economics upon which it is based. As the subtitle of the book suggests, he starts with the objectives of economic activity and policy and proceeds to the means, focusing on the role of financial markets in Chapter 2 and on economic freedom in Chapter 3. Turner starts his first chapter by pointing out the first of the fallacies that he perceives to be at the root of the failure of economics. Economic growth, both in absolute terms and per capita, does not guarantee an increase in people's average happiness, wellbeing or welfare. This is especially so in rich developed countries. Turner discusses empirical evidence relating to these matters, concluding that the relationship between average income and human wellbeing is uncertain. Moving back to theory, he discusses the hypothesis that as incomes rise material wants eventually become satiated, which he does not find convincing. Above some income threshold, he argues, a change occurs on the way people respond to more income. Three drivers are identified: increased consumption of relative-status goods, increased consumption of location-specific—and hence scarce— goods, and external effects. Another problem with the idea that rising per capita GDP makes people better off is the rise of what Bootle (2009) calls distributive activities in societies with higher income, which implies that productive activities are on the decline. Turning to the problems of measuring GDP, Turner points out that the private gains from financial market activities can coincide with social losses because the increase in complexity might lead to an increase in instability. Instead of evoking more arguments about why GDP is an imperfect measure of welfare, Turner proceeds to the theme of inequality. Writing in the pre-Piketty (2014) era, Turner focuses on the decline of the position of the poorest rather than on the gains of the top 0.1%. ...
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The second edition of L. Randall Wray’s textbook Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems was published in 2015, with slightly more pages and a restructured outline. The book is the standard of modern... more
The second edition of L. Randall Wray’s textbook Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems was published in 2015, with slightly more pages and a restructured outline. The book is the standard of modern mone(tar)y theory (MMT) – a Post-Keynesian variety centred on monetary macroeconomics, whereby the economy is explained through the examination of balance sheets, heavily focused on the monetary side.