The Swedish monetary system from a balance sheet perspective

Levy Economic Institute working paper 1035, 2024

https://www.levyinstitute.org/publications/the-swedish-monetary-system-from-a-balance-sheet-perspective

About monetary policy, SVB and bank quakes

International Journal of Pluralism and Economics Education 14 (1), S. 47-54

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.

What to do with MMT (Modern Money Theory)?

The European Central Bank and its role in a sustainable financial system, Bolsinger/Hoffmann/Villhauer (Hrsg.), Springer, S. 111-122

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.

https://link.springer.com/chapter/10.1007/978-3-031-24478-0_7

Die Eurozone und die Weltwirtschaft - Geld und Ressourcen

Vierteljahrshefte zur Wirtschaftsforschung 2 / 2022, S. 51-70

Mit der Modern Monetary Theory lässt sich die Einsicht gewinnen, dass der Staat als Schöp­fer des Geldes seine Ausgaben nicht finanzieren kann. Er sammelt sein Geld in Form von Steuern und Staatsanleihenerlösen wieder ein, welches er vorher über die Geldschöp­fung der Zentralbank in Umlauf gebracht hat. Ein Bundeshaushalt sollte daher nicht mit einem Fokus auf fiskalische Kennzahlen wie Defizit oder Staatsschulden erstellt werden. Sinnvoller wäre eine Ausrichtung auf das Gemeinwohl und die wirtschaftspolitischen Ziele.

https://www.diw.de/de/diw_01.c.859068.de/publikationen/vierteljahrshefte/2022_02_6/die_eurozone_und_die_weltwirtschaft_____geld_und_ressourcen.html

Die Aufstellung eines (Bundes-)Haushalts aus Sicht der Monetary Theory (MMT)

Jahrbuch für öffentliche Finanzen 1-2022, S. 301-314

Mit der Modern Monetary Theory lässt sich die Einsicht gewinnen, dass der Staat als Schöp­fer des Geldes seine Ausgaben nicht finanzieren kann. Er sammelt sein Geld in Form von Steuern und Staatsanleihenerlösen wieder ein, welches er vorher über die Geldschöp­fung der Zentralbank in Umlauf gebracht hat. Ein Bundeshaushalt sollte daher nicht mit einem Fokus auf fiskalische Kennzahlen wie Defizit oder Staatsschulden erstellt werden. Sinnvoller wäre eine Ausrichtung auf das Gemeinwohl und die wirtschaftspolitischen Ziele.

https://www.bwv-verlag.de/detailview?no=4401

Modern Monetary Theory: The Right Compass for Decision-Making

Intereconomics 57(2), 128-134, 2022

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.*

https://www.intereconomics.eu/contents/year/2022/number/2/article/modern-monetary-theory-the-right-compass-for-decision-making.html

Wie finanzieren wir die Corona-Schulden?- Versuch einer "richtigen" Antwort auf eine "falsche" Frage aus Sicht der Modern Monetary Theory

Wirtschaftsdienst 101(3), 200-206, 2021

Das Jahr 2020 war geprägt von der COVID-19-Pandemie und ihren wirtschaftlichen Folgen. In Deutschland stiegen staatliches Defizit sowie die Schuldenquote infolge des Rückgangs der Wirtschaftsleistung auf geschätzt 5 % bzw. 75 % des BIP an. Um die wirtschaftliche Erholung von der Pandemie nicht durch die Rückkehr zu einem rigiden Sparkurs zu gefährden, ist es jetzt von besonderer Bedeutung, sich von falschen Vorstellungen bezüglich der Finanzierung sowie der Nachhaltigkeit staatlicher Ausgabenüberschüsse zu verabschieden. Nur so können die Weichen für eine Wirtschaftspolitik des 21. Jahrhunderts richtig gestellt werden.

https://www.wirtschaftsdienst.eu/inhalt/jahr/2021/heft/3/beitrag/wie-finanzieren-wir-die-corona-schulden.html

COVID-19 and its economic consequences for the Euro Area (with Michael Paetz)

Eurasian Economic Review 11(2), 227-249, 2021

The coronavirus crisis reveals the shortcomings of the Euro Area (EA), which were already evident after the global financial crisis. We show that the self-imposed constraints within the EA have prevented a recovery in the last decade. However, the suspension of the stability and growth pact and recent measures of the European Central Bank have broken the chains. We recommend that national governments make use of their regained sovereignty inside the EMU framework and do not wait for European-wide solutions. In addition, we provide policy proposals consistent with the current EA framework.

https://link.springer.com/article/10.1007/s40822-020-00159-w#citeas

Why Pufendorf Matters (with Erik Jochem)

book chapter, in Samuel Pufendorf and the Emergence of Economics as a Social Science, Backhaus/Chaloupek/Frambach (eds.), 2021

Modern economics evolves from (neo)classical political economy, which stresses the role of the individual and rationality. Using Kantian foundations, it is argued that economic is what concerns the individual urge to pursue personal wealth. Nature and the social sphere are both ignored. An alternative view can be based on the ideas of human nature that Samuel Pufendorf formed. According to him, man is sociable. His self-interest is often applied toward this end and not an end in itself. Also, nature plays a role as man can decide what to do with it. Last but not least, Pufendorf recognizes that individuals grow up in society, where they are formed through the use of language and the internalization of conventions. Man, without society, is not perfect and cannot hope to strive for happiness. He needs support from society to protect himself from his fellow man and to increase the chances of realizing this drive toward sociability. Economics could be rebuilt on stronger foundations as neuroscience seems to confirm Pufendorf's view of human nature in general.

https://link.springer.com/chapter/10.1007/978-3-030-49791-0_10

A Paradigm Lost, a Paradigm Regained -
A Reply to Druedahl on Modern Monetary Theory (with Asker Voldsgaard)

Unpublished draft, 2020

In this paper, we respond to Druedahl's (2019) critical engagement from a neoclassical perspective with the macroeconomic school of thought Modern Monetary Theory (MMT). We find that the confusion stems from different ontologies of the economic system. These divergences relate to whether capitalist economies are fundamentally demand- or supply- constrained, whether capitalism should be understood as a monetary production system where money is non-neutral rather than neutral at all times or in the long run, whether capitalism is an equilibrating or destabilising system, if the interest rate on government liabilities is a policy variable, and the role of the state in the monetary system. We note how MMT's divergence from core neoclassical axioms has rendered MMT economists able to predict and explain economic phenomena at odds with neoclassical reasoning. Nonetheless, neoclassical economics remains ever-amendable by ad-hoc additions to preserve core notions such as the 'natural rate of interest'. The theoretical differences lead to an epistemic divide over how to provide persuading academic arguments. We are therefore dealing with a paradigm shift driven by the unequal ability to make sense of observed reality.

https://drive.google.com/file/d/13a2To14MLbCyUMPexNwciwk7Valv5MTY/view?usp=sharing

Modern Monetary Theory and the Public Purpose (with Maurice Höfgen)

American Review Of Political Economy, Bd. 15, Heft 1, 2020 

This paper investigates how the concept of public purpose is used in Modern Monetary Theory (MMT). As a common denominator among political scientists, the idea of public purpose is that economic actions should aim at benefiting the majority of the society. However, the concept is to be considered as an ideal of a vague nature, which is highly dependent on societal context and, hence, subject to change over time. MMT stresses that government spending plans should be designed to pursue a certain socio-economic mandate and not to meet any particular financial outcome. The concept of public purpose is heavily used in this theoretical body of thought and often referred to in the context of policy proposals as the ideas of universal job guarantee and banking reform proposals show. MMT scholars use the concept as a pragmatic benchmark against which policies can be assessed. With regards to the definition of public purpose, MMT scholars agree that it is dependent on the socio-cultural context. Nevertheless, MMT scholars view universal access to material means of survival as universally applicable and in that sense as the lowest possible common denominator.

https://www.arpejournal.com/volume-15-number-one/modern-monetary-theory-and-the-public-purpose/

The Job Guarantee: Full Employment, Price Stability and Social Progress (mit Maurice Höfgen)

Society Register, 3(2), 49-65, 2019

This paper presents the idea of the Job Guarantee (JG), which is a logical extension of the paradigm of a tax-driven fiat currency. The JG involves the govern- ment offering a public purpose-oriented job with a fixed hourly wage and job benefits to anyone willing to work. The JG as a bottom-up approach is locally administered but federally funded. As the analytical lens of MMT reveals, a monetarily sovereign gov- ernment is always able to provide the spending required. Macroeconomically, the JG works as an automatic countercyclical stabilizer and an excellent tool for aggregated demand management, ensuring the economy is continuously operating at full capacity. On top, the JG uses an employed buffer stock approach as a superior means to maintain price stability. Next to its favourable macroeconomic impacts, the JG offers many social benefits, particularly related to continuous employment, working condi- tions in the private sector, power relations in the labour market and democracy. While the JG and Universal Basic Income (UBI) are often discussed as comparable, competing policy proposals, the JG addresses more macroeconomic and social issues than the UBI does. This paper concludes that the JG qualifies for being the single most effective policy in order to drive the economy towards continuous full employment and price stability while realizing additional social benefits.

20605-Article Text-42889-1-10-20191231.pdf

The balance sheet approach to macroeconomics

Kapitel in S. Decker, W. Elsner und S. Flechtner (Hrsg.): "Principles and Pluralist Approaches in in Teaching Economics - Towards a Transformative Science", Routledge, 2019

In 1905, Georg Friedrich Knapp published The State Theory of Money in his native German, claiming that money is a "creature of law" and not connected to metals via some intrinsic value. When the English translation appeared in 1924, apparently at the wishes of John Maynard Keynes, the German version had run through four editions, upon which the last the translation builds. There also had been considerable debate about 'Chartalism' - the idea that money derived its acceptance by legal means - in the German academic literature. Among others, Knut Wicksell and Georg Simmel commented on it. Since so far there has not been any English-language publication on this issue, it is deemed worthwhile to provide such. After presenting the main arguments that Knapp makes in his book, the academic reviews that followed are presented and evaluated.

https://books.google.de/books?id=Ds-gDwAAQBAJ&lpg=PA253&dq=ehnts%20balance%20sheet%20approach%20decker%20elsner&hl=de&pg=PA243#v=onepage&q&f=false

Knapp's 'State Theory of Money' and its reception in German academic discourse 

IPE Berlin working paper 115/2019

In 1905, Georg Friedrich Knapp published The State Theory of Money in his native German, claiming that money is a "creature of law" and not connected to metals via some intrinsic value. When the English translation appeared in 1924, apparently at the wishes of John Maynard Keynes, the German version had run through four editions, upon which the last the translation builds. There also had been considerable debate about 'Chartalism' - the idea that money derived its acceptance by legal means - in the German academic literature. Among others, Knut Wicksell and Georg Simmel commented on it. Since so far there has not been any English-language publication on this issue, it is deemed worthwhile to provide such. After presenting the main arguments that Knapp makes in his book, the academic reviews that followed are presented and evaluated.

From Wicksell to Le Bourva to Modern Monetary Theory: a Wicksell connection 
(mit Nicolas Barbaroux)

Samuelson and Davidson on ergodicity: A reformulation 

(mit Miguel Carrión Álvarez)

Journal of Post Keynesian Economics, 39 (1), 2016

The concept of ergodicity in economics seems to have the qualities of a shibboleth-a word or saying used by adherents of a party, sect, or belief, and usually regarded by others as empty of real meaning. It is in use by both neoclassical economics-after Samuelson (1965Samuelson, P. A. "Proof That Properly Anticipated Prices Fluctuate Randomly." Industrial Management Review, 1965, 6 (2), 41-49.[Web of Science ®], [Google Scholar], p. 43), who used the term in his paper on what later became a foundation of the efficient market hypothesis-and post Keynesian economics-after Davidson, who picked up the term in order to highlight methodological differences. Considering the origin of the concept in statistical physics and its use in the topology of dynamical systems, which most economists are not conversant with, the importance ascribed to ergodicity in economic debate seems mystifying. We deconstruct the meaning of the term in the major contributions of Samuelson and Davidson. We suggest an alternative to (non)ergodicity to discuss the nature of randomness in the real world. While neoclassical theory assumes stochastic randomness, post Keynesians assume nonstochastic randomness, a term developed by the mathematician Kolmogorov (1986Kolmogorov, A.N. "On the Logical Foundations of Probability Theory."In K. Ito, and J.V. Prokhorov (eds.), Probability and Mathematical Statistics, Moscow, 1986, pp. 467-471. [Google Scholar], p. 467). We argue that even in an ergodic world there is a problem with the idea that stochastic randomness can be dealt with by the financial system.

https://www.tandfonline.com/doi/abs/10.1080/01603477.2016.1145062

Revisiting MMT, Sovereign Currencies and the Eurozone: A Reply to Marc Lavoie

Review of Political Economy, 2024

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.

The meaning of MMT: a reply

EDI working paper 03, 2022

In their examination of Modern Monetary Theory (MMT), Drumetz and Pfister (2021) approached the theory from the policy consequences that would follow. In this paper, I restate the core of MMT and offer some suggestions for central banks. Theories are explanations of what we see, and MMT describes money creation and destruction. MMT hence 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. It is here where 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.

https://edi.bard.edu/research/notes/wp-03-ehnts-the-meaning-of-mmt-a-reply

Was ist Modern Monetary Theory (MMT)?

Perspektiven der Wirtschaftspolitik 23(2), S. 108-119

In their examination of Modern Monetary Theory (MMT), Drumetz and Pfister (2021) approached the theory from the policy consequences that would follow. In this paper, I restate the core of MMT and offer some suggestions for central banks. Theories are explanations of what we see, and MMT describes money creation and destruction. MMT hence 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. It is here where 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.

https://www.degruyter.com/document/doi/10.1515/pwp-2021-0027/html

The unexpected victory of Modern Monetary Theory

International Journal for Pluralism and Economics Education,  11(3), 2020, S. 293-295

The coronavirus crisis has highlighted many aspects of economics and other social issues. In this article, the author emphasised the theoretical approach of macroeconomics to government spending and the monetary system only. Focusing on two fundamental issues - public deficits and (lack of) technical limitations of government spending, it is clear that our discipline has to change in order to be able to advise real world policy makers. Those who have already understood MMT have based their policy actions on it. Academic economists have been taken by surprise. The widely circulated calls of European economists to frame public deficits and debt as bad, propose 'financing' of government spending which is technically impossible (the state is the creator of currency) and think about burden-sharing arrangements for public bonds whereas in reality these are risk-free and should be.

Every crisis is also an opportunity. This crisis helps us understand that our textbook models of government spending and public deficits and debts are wrong (Kelton, 2020). With a more pluralistic view, we would be able to help policy makers now. Instead, much advice that will be given is either irrelevant or unhelpful. Economics must open up.

International Journal for Pluralism and Economics Education, 11(3), 2020, 293-295

From Wicksell to Le Bourva to Modern Monetary Theory: a Wicksell connection

History of Economic Ideas 28(3), 65-88, 2020

In the aftermath of the Great Financial Crisis (gfc), and within the con- text of significant macroeconomic imbalances in the world economy, economists have shown renewed interest in the way central banks and financial systems work. The rise of Modern Monetary Theory (MMT) has relied on the examination of balance sheets, which has led to advancements in the understanding of the nuts and bolts of the financial system and the fundamental role of taxes, reserves, and deposits. While the school is associated with Post-Keynesian economics, we make the case that it could just as well be called Post-Wicksellian. The aim is not to argue for or against some label, but to make explicit the Wicksellian connection. In doing this, we bring forward old discussions and insights, which can be integrated into recent debates.

MMT authors emphasize the importance of endogenous money and the examination of assets and liabilities in balance sheets. In our inquiry, we demonstrate that a horizontalist approach - adopted by MMT scholars - was already present in Wicksell (1898) and in the writings of French economist Jacques Le Bourva (1959, 1962). We examine the essential publications of the two authors and compare their views with the insights of mmt. By doing this, we hope to show continuity in monetary thought. mmt should not be seen as an intruder from the outside of monetary theory, but rather as a continuation and expansion of certain ideas that have long been part of the discipline. Identifying areas of disagreement between the three views should help bring clarity to the issues that are still being disputed.

https://www.libraweb.net/articoli3.php?chiave=202006103&rivista=61&articolo=202006103003

Macroeconomics and the world economy in one lecture: a didactic primer

International Journal of Pluralism and Economics Education 11(2), 2020

This paper explains the basics of MMT and analyzes the current design of the Eurozone from an MMT perspective. It becomes obvious that individual member states of the Eurozone lack monetary sovereignty, which is not compensated by a fiscal authority on EMU-level. This results in the current permanent lack of aggregated demand culminating in high rates of unemployment and output gaps. Although the current QE policy of the ECB enlarges individual countries' policy space to cope with the problems at hand, the fundamental flaws in the design of the monetary union desperately need to be fixed. This is even more urgent with regards to the urgently needed socio-ecological transition that is required to tackle climate change adequately. In this light, the Green New Deal with the incorporation of a Job Guarantee program and the Euro Treasury as possible policy solutions for the Eurozone are briefly discussed.

https://www.inderscienceonline.com/doi/abs/10.1504/IJPEE.2020.111288

Modern monetary theory: a European perspective (with Maurice Höfgen)

 real world economics review, Bd. 89, 2019

This paper explains the basics of MMT and analyzes the current design of the Eurozone from an MMT perspective. It becomes obvious that individual member states of the Eurozone lack monetary sovereignty, which is not compensated by a fiscal authority on EMU-level. This results in the current permanent lack of aggregated demand culminating in high rates of unemployment and output gaps. Although the current QE policy of the ECB enlarges individual countries' policy space to cope with the problems at hand, the fundamental flaws in the design of the monetary union desperately need to be fixed. This is even more urgent with regards to the urgently needed socio-ecological transition that is required to tackle climate change adequately. In this light, the Green New Deal with the incorporation of a Job Guarantee program and the Euro Treasury as possible policy solutions for the Eurozone are briefly discussed.

https://www.paecon.net/PAEReview/issue89/EhntsHofgen89.pdf

The fiscal-monetary nexus in Germany

IPE working paper 138/2020

Die Modern Monetary Theory (MMT) ist eine empirische Geldtheorie und nutzt insbesondere Bilanzen und Buchungen als methodische Grundlage zur Erkenntnisgewinnung. Nach der funktionalen Ausgestaltung moderner Geldsysteme, in denen die Regierung keine Schulden in Auslandswährung hat oder einen festen Wechselkurs garantiert, handelt es sich bei modernem Geld im Grunde genommen um Steuergutschriften. Diese werden durch die Zentralbank als Monopolistin der Währung den teilnehmenden Banken gutgeschrieben, wenn z. B. die Regierung ihre Ausgaben erhöht. Damit fällt der Regierung eine fundamentale Rolle in der Wirtschaft zu. Vollbeschäftigung, Preisstabilität und nachhaltige Ressourcenbewirtschaftung sind ohne eine Theorie der fiskalpolitischen Steuerung wohl nicht zu erreichen. Einige Reformvorschläge mit dem Ziel der Erhöhung des Gemeinwohls, wie der Green New Deal oder das Euro Treasury, basieren auf MMT und könnten sich auch in der Eurozone relativ einfach umsetzen lassen.

https://www.ipe-berlin.org/fileadmin/institut-ipe/Dokumente/Working_Papers/ipe_working_paper_138.pdf

Die Modern Monetary Theory: Staatsschulden als Steuergutschriften

Vierteljahrshefte zur Wirtschaftsforschung, Bd. 88, Heft 4, S. 77-89, 2019

Die Modern Monetary Theory (MMT) ist eine empirische Geldtheorie und nutzt insbesondere Bilanzen und Buchungen als methodische Grundlage zur Erkenntnisgewinnung. Nach der funktionalen Ausgestaltung moderner Geldsysteme, in denen die Regierung keine Schulden in Auslandswährung hat oder einen festen Wechselkurs garantiert, handelt es sich bei modernem Geld im Grunde genommen um Steuergutschriften. Diese werden durch die Zentralbank als Monopolistin der Währung den teilnehmenden Banken gutgeschrieben, wenn z. B. die Regierung ihre Ausgaben erhöht. Damit fällt der Regierung eine fundamentale Rolle in der Wirtschaft zu. Vollbeschäftigung, Preisstabilität und nachhaltige Ressourcenbewirtschaftung sind ohne eine Theorie der fiskalpolitischen Steuerung wohl nicht zu erreichen. Einige Reformvorschläge mit dem Ziel der Erhöhung des Gemeinwohls, wie der Green New Deal oder das Euro Treasury, basieren auf MMT und könnten sich auch in der Eurozone relativ einfach umsetzen lassen.

https://elibrary.duncker-humblot.com/zeitschriften/id/25/vol/88/iss/2173/art/12327/

Completing the Euro: The Euro Treasury and the Job Guarantee (mit Pavlina Tcherneva und Esteban Cruz-Hidalgo)

Kapitel in E. Febrero (Hrsg.): "20 years of the Euro", Revista de Economia Critica, 2019

The problems with the design of the Eurozone came into focus when, late in 2009, several member nations - notably Greece - failed to refinance their government debt. The crisis that followed was not entirely a surprise. When the Euro was launched in 1999, many economists warned that the single currency was unworkable. Even Eurozone optimists argued that the Euro project would eventually need to be completed. More than 10 years after the crisis, unemployment rates remain elevated and continue to threaten the social, political and economic stability of the Eurozone. The institutional constraints of the single currency however preclude bold action to address these challenges. In this paper, we suggest that tackling the twin problems of the Eurozone - its institutional flaws and mass unemployment - could be addressed by creating a Euro Treasury that would finance a Job Guarantee program, which would eliminate mass unemployment, enhance price stability, and foster social and economic integration across Europe.

https://revistaeconomiacritica.org/sites/default/files/9-CruzHidalgo-Ehnst-Tcherneva_Completing-the-Euro.pdf

The Present State of Economics: Errors and Omissions Excepted (mit Fritz Helmedag)

Kapitel in O. Feraboli and C. Morelli (Hrsg.): "Post-Crash Economics: Plurality and Heterodox Ideas in Teaching and Research", Springer, 2018

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. This chapter explores some of these truths and demonstrates what they spread across both micro- and macroeconomics.

The euro zone crisis: what would John Maynard do?

IPE Berlin working paper 72/2016

In his letter to US President Franklin D. Roosevelt Keynes (1933) wrote about "the technique of recovery itself‟. An increase in output is brought about by an increase in purchasing power, Keynes argues, which can come from three sectors: households, firms and government. Using the IS/MY macroeconomic model developed by Ehnts (2014), which features sectoral balances and endogenous money, the situation of some euro zone members is examined with a focus on the three techniques of recovery: increases in debt of the respective sectors as defined by Keynes. A fourth technique, an increase in spending by the rest of the world, is added. The conclusion is that the policy recommendation given by Keynes in his letter also holds for the euro zone at present: a rise in debt-financed government expenditure. Some reform at the institutional level in Europe would enable "the technique of recovery‟ to work via the TARGET2 payment system, which is organized along Keynes‟ International Clearing Union proposal and a solid foundation to build on.

https://www.ipe-berlin.org/fileadmin/downloads/Papers_and_Presentations/IPE_WP_72.pdf

Die Krise der VWL und die Vision einer Pluralen Ökonomik 

(mit Lino Zeddies)

Wirtschaftsdienst, 96 (10), 2016

Die andauernde Finanzkrise hat tiefliegende Probleme des ökonomischen Mainstreams offengelegt und lässt Forderungen nach einer Erneuerung des ökonomischen Denkens lauter werden. Die Autoren beschreiben die Kritik am Status quo und gehen dabei auf die Vorwürfe von Einseitigkeit, blinden Flecken, Realitätsferne und impliziter Normativität ein. Als vielversprechender Gegenentwurf wird die Vision einer Pluralen Ökonomik vorgestellt und anhand von fünf charakteristischen Säulen beschrieben: Theorienpluralismus, Methodenpluralismus, historische Fundierung, wissenschaftstheoretische und ethische Reflexion sowie Interdisziplinarität.