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Monetary Policy, Privileges and Economic Development: Ordoliberal Lessons for the EMU

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  • Duarte Pablo

    (UniversitätLeipzig , Institut für empirische Wirtschaftsforschung, Germany)

Abstract

The currency and economic reform of West Germany in 1948 created institutional conditions that permitted a rapid postwar recovery. The reforms were based on the idea of privilege-free competition as a means towards a functioning economic order which is acceptable to participants. The crisis-management policies in the EMU after 2009 go in the opposite direction. Based on technocratic arguments, European institutions have granted privileges in form of bailouts. Indirectly, the ECB has granted further privileges through its ultra-loose monetary policy. The expected consequences are less competition, higher concentration of economic and political power, “zombification” of firms and banks as well as lower productivity and output growth. The lesson from West Germany’s reform for the EMU is the importance of privilege-free competition for economic development.

Suggested Citation

  • Duarte Pablo, 2018. "Monetary Policy, Privileges and Economic Development: Ordoliberal Lessons for the EMU," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 69(1), pages 135-152, July.
    • Handle: RePEc:bpj:ordojb:v:69:y:2018:i:1:p:135-152:n:9
    DOI: 10.1515/ordo-2019-0010
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    Cited by:

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    More about this item

    Keywords

    Privilege-free competition; free development paradigm; autocratic development paradigm; technocracy; monetary policy; bailouts; D63; E02; E52;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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