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Monetary Policy Crisis Management as a Threat to Economic Order

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  • Andreas Freytag
  • Gunther Schnabl

Abstract

The paper analyses the effects of the monetary policy crisis management of the European Central Bank on the economic order of Germany. It is argued that in post-war Europe the German social market economy as designed by Eucken (1952) and Müller-Armack (1966) has been a core element of growth, welfare, social cohesion and political stability in Germany and Europe as a whole. It is shown that the monetary policy rescue measures of the European Central Bank have undermined the constitutive principles of the German social market economy, what has considerably contributed to the erosion of (productivity) growth and welfare in Germany and Europe. As the outcome is crumbling social cohesion and growing political instability, a timely exit from ultra-expansionary monetary policy is postulated.

Suggested Citation

  • Andreas Freytag & Gunther Schnabl, 2017. "Monetary Policy Crisis Management as a Threat to Economic Order," CESifo Working Paper Series 6363, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6363
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    References listed on IDEAS

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    Cited by:

    1. Gunther Schnabl, 2017. "The Failure of ECB Monetary Policy from a Mises-Hayek Perspective," CESifo Working Paper Series 6388, CESifo Group Munich.
    2. Schnabl, Gunther, 2018. "70 years after the German currency and economic reform: The monetary, economic and political order in Europe is disturbed," Working Papers 156, University of Leipzig, Faculty of Economics and Management Science.

    More about this item

    Keywords

    economic order; social market economy; Soziale Marktwirtschaft; Germany; Walter Eucken; Alfred Müller-Armack; monetary policy; crisis management;

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • E14 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Austrian; Evolutionary; Institutional
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School

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