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The Independent European Central Bank: Keynesian Alternatives

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  • Philip Arestis

Abstract

In this paper, the author aims to question the assumptions underlying the economic case for the independent European Central Bank (ECB) and argues that although a European Clearing Agency (ECA) of the type Keynes envisaged for the international economy is not a panacea for the economic problems of the European Union (EU), it is, nonetheless, a better way forward and far superior to the ECB. The paper (1) outlines the theoretical basis of Keynesian monetary and financial theory; (2) aims to ascertain the extent to which credit availability is affected by the creation of an ECB and, on that basis, to offer a critical analysis of current proposals for an ECB; (3) looks closely at the case for the ECA, seen as performing a range of functions rather than having a remit defined simply in terms of strict monetary control, including a commitment to providing the necessary finance for full employment and a responsibility for ensuring that the burden of balance-of-payments adjustment falls upon both deficit and surplus countries.

Suggested Citation

  • Philip Arestis, 1999. "The Independent European Central Bank: Keynesian Alternatives," Economics Working Paper Archive wp_274, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_274
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    References listed on IDEAS

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    1. Charles R. Bean, 1992. "Economic and Monetary Union in Europe," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 31-52, Fall.
    2. Chick, Victoria & Dow, Sheila, 1988. "A Post-Keynesian Perspective on the Relation Between Banking and Regional Development," Stirling Economics Discussion Papers PE/88/1, University of Stirling, Division of Economics.
    3. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239.
    4. Dornbusch, Rudiger, 1987. "Exchange Rate Economics: 1986," Economic Journal, Royal Economic Society, vol. 97(385), pages 1-18, March.
    5. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    6. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
    7. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    8. Arestis, Philip & Howells, Peter, 1996. "Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'," Cambridge Journal of Economics, Oxford University Press, vol. 20(5), pages 539-551, September.
    9. Davis, E. Philip, 1995. "Debt, Financial Fragility, and Systemic Risk," OUP Catalogue, Oxford University Press, number 9780198233312.
    10. Currie, David, 1993. "International Cooperation in Monetary Policy: Has It a Future?," Economic Journal, Royal Economic Society, vol. 103(416), pages 178-187, January.
    11. Arestis, Philip & Sawyer, Malcolm, 1997. "How Many Cheers for the Tobin Transactions Tax?," Cambridge Journal of Economics, Oxford University Press, vol. 21(6), pages 753-768, November.
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    Cited by:

    1. Stéfano Figuera, 2002. "The reform of the international monetary system (a Keynesian approach)
      [La réforme du système monétaire international (une réflexion dans une perspective keynésienne)]
      ," Working Papers hal-01526941, HAL.
    2. FIGUERA, Stephano, 2002. "La réforme du système monétaire international : une réflexion dans une perspective keynésienne," LATEC - Document de travail - Economie (1991-2003) 2002-01, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.

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