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How to Fight (or Not to Fight) a Slowdown

Author

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  • Eckhard Hein
  • Achim Truger

Abstract

The current global recession, along with the credit crisis, requires that the prevailing economic model be seriously debated and, these economists contend, reformed. The authors criticize the mainstream New Consensus approach in macroeconomics for its reliance on stabilization by means of monetary policies, its ill-designed approach to the role of wages and wage policies, and its complete neglect of fiscal policies. Instead, they argue that for macroeconomic stabilization the whole macroeconomic policy mix of monetary, fiscal, and wage policies, as well as open economy conditions, has to be considered. Based on this view, they analyze macroeconomic performance and macroeconomic policies in France, Germany, Sweden, and the UK between 1996 and 2005. They show that the widely differing success with respect to the degree of recovery after the 2000-2001 slowdown can be explained very plausibly by differences in the macroeconomic policy mix. However, there are important drawbacks in each case.

Suggested Citation

  • Eckhard Hein & Achim Truger, 2009. "How to Fight (or Not to Fight) a Slowdown," Challenge, Taylor & Francis Journals, vol. 52(3), pages 52-75.
  • Handle: RePEc:mes:challe:v:52:y:2009:i:3:p:52-75
    DOI: 10.2753/0577-5132520303
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    File URL: http://hdl.handle.net/10.2753/0577-5132520303
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    Citations

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    Cited by:

    1. Eckhard Hein & Achim Truger & Till van Treeck, 2011. "The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective," IMK Working Paper 9-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Eckhard Hein & Daniel Detzer, 2015. "Finance-Dominated Capitalism and Income Distribution: A Kaleckian Perspective on the Case of Germany," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(2), pages 171-191, July.
    3. Alexander Herzog-Stein & Fabian Lindner & Simon Sturn & Till van Treeck, 2010. "Vom Krisenherd zum Wunderwerk?," IMK Report 56-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Detzer, Daniel & Hein, Eckhard, 2014. "Finance-dominated capitalism in Germany: Deep recession and quick recovery," IPE Working Papers 39/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises: A European perspective," IPE Working Papers 14/2012, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
    7. Jorge Uxó & Jesús Paúl & Eladio Febrero, 2011. "Current Account Imbalances in the Monetary Union and the Great Recession: Causes and Policies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(5), pages 571-592, December.
    8. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    9. Heinze, Henriette, 2018. "The determinants of German exports: An analysis of intra- and extra-EMU trade," IPE Working Papers 95/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    10. repec:mes:postke:v:35:y:2012:i:2:p:187-213 is not listed on IDEAS
    11. Eckhard Hein & Achim Truger, 2012. "Finance-dominated capitalism in crisis—the case for a global Keynesian New Deal," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(2), pages 187-213.
    12. Achim Truger, 2013. "Steuerpolitik im Dienste der Umverteilung: eine makroökonomische Ergänzung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 82(1), pages 43-59.

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