The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union

Schnabl, Gunther; Müller, Sebastian

doi:10.1515/ev-2019-0029

Cited by 3 publications

(3 citation statements)

References 40 publications

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“…6 Only as of 2010 growth picked up and the general government debt level as per cent of GDP started to decline (Figure 6). Complementary to the strong improvement of the German current account position after the turn of the millennium, the current account deficits of several southern as well as central and eastern European countries substantially increased, as capital inflows (originating in Germany) accelerated (Schnabl & Müller, 2019). Combined with low interest rates set by the European Central Bank, capital inflows boosted private consumption and construction activity in the southern European countries.…”

Section: Euro Area Before and After The Great Financial And Euro Crisismentioning

confidence: 99%

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How to escape from the debt trap: Lessons from the past

Mayer¹,

Schnabl

2023

World Economy

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Rising public debt everywhere has raised the question of how to reduce debt again in the future. High public debt also seems to be an impediment for the exit of central banks from ultra-low interest rates and quantitative easing. Historical precedents and proposals have included austerity, haircuts and the generation of inflation. Each way has advantages and disadvantages, including uncertainty about effects and side-effects. We approach the issue from an historical perspective, based on case studies of prominent approaches to debt reduction. We analyze debt reduction through economic austerity in Italy, hyperinflation in Germany after World War I, inflation in Argentina since the 1980s, currency reform in Germany after WW II, and financial repression in the United States and the United Kingdom after WW II. Finally, we discuss Ronald McKinnon's order of economic and financial liberalization as well as the Chicago Plan combined with the introduction of central bank digital currencies as an option for the future.

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Section: Euro Area Before and After The Great Financial And Euro Crisismentioning

confidence: 99%

“…Stabilisation of exchange rates combined with liberalisation of global trade provided an important growth stimulus for the member states of the Bretton–Woods System. European countries benefitted also from the process of European integration (Schnabl & Müller, 2019).…”

Section: Exit Via Hidden Debt Reductionmentioning

confidence: 99%

How to escape from the debt trap: Lessons from the past

Mayer¹,

Schnabl

2023

World Economy

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“…In the heterogenous European Monetary Union, monetary policy making was unified for a set of EU member states, whereas the responsibility for fiscal and social policy making remained on the national level. Whereas a centralized fiscal and social policy would have been able to absorb asymmetric shocks (De Grauwe, 2012), uncoordinated fiscal policies triggered a divergence of business cycles, which undermined the effectiveness of the ECB's monetary policy, putting the stage for the European financial and debt crisis (Müller & Schnabl, 2019).…”

Section: Crises As Catalyst For the Erosion Of The Ordermentioning

confidence: 99%

Seventy‐five years West German currency reform: Crisis as catalyst for the erosion of the market order

Schnabl

2023

Kyklos

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The paper analyzes the role of the 1948 currency and economic reform in West Germany for growth and social cohesion in Germany and Europe. It describes the theoretical foundation by Walter Eucken and the implementation and defense of the new economic order by Ludwig Erhard. The paper stresses the positive impact of the market economy on growth and welfare in Germany and Europe. Then, it is shown that Eucken's constituting principles of the market economy were gradually eroded after euro introduction in course of crises, with the negative repercussions on growth and equality being explained. The policy conclusion is that only the reconstitution of price stability in the euro area can prevent a further decline of welfare in Europe. The 1948 economic reforms provide an important blueprint for the necessary reform process.

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Macroeconomic Policy Making and Current Account Imbalances in the Euro Area

Murai¹,

Schnabl²

2021

Credit and Capital Markets – Kredit und Kapital

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The paper analyses the role of fiscal and monetary policy for the development of the current account imbalances in the euro area, including the most recent developments during the coronavirus crisis. Several financial transmission channels such as international bank lending, changes in TARGET2 balances, international rescue credit and government bond purchases of euro area central banks are identified. It is found that differing fiscal policy stances which have interacted differently with the ECB’s monetary policy have been at roots of first diverging and then converging current account positions in the euro area. Since the European financial and debt crisis, public financing mechanisms and the unconventional monetary of the ECB have contributed to the persistence of intra-euro area current account imbalances.

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The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union

Cited by 3 publications

References 40 publications

How to escape from the debt trap: Lessons from the past

How to escape from the debt trap: Lessons from the past

Seventy‐five years West German currency reform: Crisis as catalyst for the erosion of the market order

Macroeconomic Policy Making and Current Account Imbalances in the Euro Area

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