Archive

Susanne Uhl:
The European Member States and Tax Sovereignty (in German)

Eckhard Hein, Achim Truger:
Editorial to the Special Issue on How to cope with divergence in an enlarging European Union?

Catherine Mathieu, Henri Sterdyniak:
How to deal with economic divergences in EMU?

Sergio Rossi:
International capital flows within the European Monetary Union: Increasing economic divergence between the centre and the periphery

Özlem Onaran:
Capital Flows, Turbulences, and Distribution: The Case of Turkey

Hubert Gabrisch, Jens Hölscher:
The Successes and Failures of Economic Transition. The European Experience
(Mario Holzner)

Marc Lavoie:
Introduction to Post-Keynesian Economics
Geoffrey C. Harcourt
The Structure of Post-Keynesian Economics
(Eckhard Hein)

Martin Beckmann:
Das Finanzkapital in der Transformation der europäischen Ökonomie
(Johannes Schulten)

Searching for Common Ground: Interactive Agency in Heterodox Economics

Mary V. Wrenn

The individual, economic agent has antecedents and consequences that shape her perceptions of the world, in other words, form the individual’s mental models. Furthermore, the individual is a totality of mental models, which shape perception and influence the selection of relevant models to apply to data and
interpret input. The influence of mental models therefore directly influences the degree of agency the individual is able to exercise. Moreover, whatever assumptions are made regarding the degree of agency an individual possesses informs the theoretical structure from which any approach to economics is built. This paper seeks to examine and compare the role of agency in heterodox economic thought and proposes that the theme of the individual might well serve as a missing link between otherwise disparate groups of thought.

JEL classifications: B40, B51, B52, B53, B59
Keywords: agency, structure, institutions, mental models, heterodox economics

How to Deal With Economic Divergences in EMU?

Catherine Mathieu and Henri Sterdyniak

Since the launch of the euro, persistent and even rising disparities among member states have made it diffcult to implement short-term or structural common
economic policies. The article gives an overview of Euro area disparities in terms of growth and inflation and imbalances, mainly unemployment and current accounts. Four explanations are considered: the benefits of the single currency for catching-up countries, the weaknesses of the Euro area economic policy framework; the implementation of non-cooperative domestic policies which have induced excessive competition and insufficient coordination and hurt
mainly the larger economies; and the crisis of the European continental model in a global world. Four strategies are discussed: increasing market flexibility;
moving towards the knowledge society of the Lisbon Agenda; re-nationalising economic policies; and introducing a more growth-oriented policy framework.

JEL classification: E61
Keywords: European economy, policy-mix, European social model

International Capital Flows Within the European Monetary Union: Increasing Economic Divergence Between the Centre and the Periphery

Sergio Rossi

This paper aims at investigating some neglected consequences of free capital mobility in the Euro area. The approach we use in this work is based on the bookkeeping nature of money, which shows that capital – in the form of bank deposits – is mobile within a currency area but actually immobile between different monetary spaces. Within the Euro area both short- and long-term investments are directed into those economies where the return on investment is highest, a magnitude that is positively correlated with the rate of real growth. If so, then economic divergence might increase between member countries of the European Monetary Union (EMU), giving rise thereby to a higher rate of unemployment in those member countries that suffer from net capital outflows, to the benefit of some other countries in the same area.

JEL classifications: E31, E63, F21, F36
Keywords: capital mobility, economic divergence, monetary policy, monetary union

Asset-Based Reserve Requirements: A New Monetary Policy Instrument for Targeting Diverging Real Estate Prices in the Euro Area

Michael Holz

Can monetary policy prevent real estate bubbles from harming economic welfare? The European Central Bank (ECB) has to conduct monetary policy for
the Euro area as a whole, but her policy affects countries with rapidly rising house prices (e. g. Spain) in a markedly different way than those with stagnating
house prices (like Germany). For opposing divergent real estate price developments within the European Monetary Union (EMU), interest rate policy is
not the appropriate instrument; whereas fine tuning« may be possible with the help of asset-based reserve requirements. All financial institutions would be
forced to deposit them at the ECB (as a percentage of asset holdings). Reserve rates are free to vary between countries. Therefore, rates should be highest in
those countries where appropriate indicators signal a house price bubble.

JEL classifications: E44, E52, G18
Keywords: monetary policy, real estate prices, Tobin’s Q, minimum reserve policy, financial stability

Capital Flows, Turbulences, and Distribution: The Case of Turkey

Özlem Onaran

This paper presents the mechanism of the boom-bust cycles in the context of domestic and international financial liberalisation in the developing countries,
and the effects of crises and exchange rate volatility on functional income distribution. It is based on the case of Turkey, which has experienced two severe crises in 1994 and 2001 after the liberalisation of capital flows, and which has also been hit the hardest during the May-June 2006 turbulences. The paper analyses the recent turbulences in the global economy and their consequences in the emerging markets as a case study to illustrate the endogenous formation of expectations. The recovery in Turkey after the turmoil is not based on a solution to the structural causes of the problem, since it has completely depended on the reversal of the capital outflows thanks to high interest rate, but the continuity of this game is far from clear.

JEL classifications: E12, E22, E25, F32, G32
Keywords: financial fragility, boom-bust cycles, post-Keynesian, distribution, Turkey