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The “New†Neoclassical International Political Economy of Macroprudential Regulation and Capital Controls: “Style†over “Substanceâ€

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  • Devin T. Rafferty

Abstract

A “new†neoclassical international political economy (NNIPE) emerged from the 2008 financial crisis showing how macroprudential regulation and capital controls (MPR-CC) can eliminate the systemic risk behind endogenous financial cycles. An implication of this is that decentralized capitalism is inherently financially unstable, which appears to make inroads with heterodox traditions. However, this paper demonstrates that NNIPE represents a superficial, rhetorical appearance of theoretical improvement, as represented in its “style,†while the “substance†of its underlying assumptions and mechanisms remain mired in neoclassicism. Moreover, it grew out of ideologically-motivated ideational change at the International Monetary Fund.

Suggested Citation

  • Devin T. Rafferty, 2020. "The “New†Neoclassical International Political Economy of Macroprudential Regulation and Capital Controls: “Style†over “Substanceâ€," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(4), pages 662-672, December.
    • Handle: RePEc:sae:reorpe:v:52:y:2020:i:4:p:662-672
    DOI: 10.1177/0486613420947828
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    References listed on IDEAS

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    More about this item

    Keywords

    international political economy; macroprudential regulation; capital controls; Minsky; IMF; productive incoherence;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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