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      World Review of Political Economy

      Volume 9, Issue 4
       
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      The Eurozone's Crisis Conundrum and the Role of Macroeconomic Theory

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            Abstract

            In the years before the global financial crisis (GFC), macroeconomic profession converged on many points of how financial markets work and how they should be regulated. However, the course of events mired the majority of European Union (EU) economies in the state of prolonged lower output, higher unemployment and ever-increasing levels of both private and public debt. They have marked an end to the economics profession honeymoon. Afterward, the main debate in the process of designing the crisis management response started to revolve around two opposed macroeconomic views: the New Keynesian and the New Classical/supply-side view. The New Keynesian view relies on the expansionary policy targeted to boost aggregate demand. However, New Classicals/supply-siders advocate structural reforms and austerity as the path out of the current state of economic malaise. We provide an analysis of how those opposing views fail to appreciate the fundamental tenets of our monetary economy and inspire ineffective policies.

            Content

            Author and article information

            Journal
            Journal ID (doi): 10.2307/j50005553
            Journal ID (jcode): worlrevipoliecon
            Title: World Review of Political Economy
            Publisher: Pluto Journals
            ISSN: 2042-891X
            ISSN: 2042-8928
            Publication date (Print): 1 December 2018
            Volume: 9
            Issue: 4 ( doiID: 10.13169/worlrevipoliecon.9.issue-4 )
            Pages: 477-506
            Article
            Publisher ID: worlrevipoliecon.9.4.0477
            DOI: 10.13169/worlrevipoliecon.9.4.0477
            SO-VID: 708b3687-9c2e-4238-8e46-792f51affb94
            Copyright © © 2018 World Association for Political Economy
            License:

            All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

            History
            Custom metadata
            lang eng

            ScienceOpen disciplines: Political economics
            Keywords: fiscal policy,debt,endogenous money,European Central Bank,macroeconomic orthodoxy

            References

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