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Ordoliberalism, pragmatism and the eurozone crisis: How the German tradition shaped economic policy in Europe

Listed author(s):
  • Feld, Lars P.
  • Köhler, Ekkehard A.
  • Nientiedt, Daniel

German policy during the Eurozone crisis supposedly follows an ordoliberal tradition. In this paper, we discuss to what extent this contention holds and to what extent Germany pragmatically responded to different crisis phenomena. A proper analysis of ordoliberal thinking reveals that the European Monetary Union can be justified on ordoliberal grounds as an economic constitution for Europe in which several pillars supposedly aim at ensuring sound money in the Eurozone. The policies the German government pushed during the Eurozone crisis have been informed by the ordoliberal tradition. In particular, this tradition may explain why the German government has been hesitant to support the call for Eurobonds and has only reluctantly established the European Stability Mechanism (ESM). However, the decisions on the ESM and the acceptance of unconventional monetary policy in Europe show that German economic policy largely responded pragmatically to the challenges offered by the crisis.

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Paper provided by Walter Eucken Institut e.V. in its series Freiburg Discussion Papers on Constitutional Economics with number 15/04.

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Date of creation: 2015
Handle: RePEc:zbw:aluord:1504
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  1. Feld Lars P., 2013. "Zur Bedeutung des Manifests der Marktwirtschaft oder: Das Lambsdorff-Papier im 31. Jahr," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 62(3), pages 227-243, December.
  2. Vanberg, Viktor J., 2014. "Ordnungspolitik, the Freiburg School and the reason of rules," Freiburg Discussion Papers on Constitutional Economics 14/01, Walter Eucken Institut e.V..
  3. Bernanke, Ben S. & Mihov, Ilian, 1997. "What does the Bundesbank target?," European Economic Review, Elsevier, vol. 41(6), pages 1025-1053, June.
  4. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 7-46, 04.
  5. Feld, Lars P., 2012. "Europa in der Welt von heute: Wilhelm Röpke und die Zukunft der Europäischen Währungsunion," Freiburg Discussion Papers on Constitutional Economics 12/2, Walter Eucken Institut e.V..
  6. Berger, Helge & Nitsch, Volker, 2008. "Zooming out: The trade effect of the euro in historical perspective," Journal of International Money and Finance, Elsevier, vol. 27(8), pages 1244-1260, December.
  7. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
  8. Rudolf Richter, 2012. "German “Ordnungstheorie”. From the Perspective of the New Institutional Economics," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(4), pages 473-500.
  9. Werner Bonefeld, 2012. "Freedom and the Strong State: On German Ordoliberalism," New Political Economy, Taylor & Francis Journals, vol. 17(5), pages 633-656, November.
  10. Stephanie Blankenburg & Lawrence King & Sue Konzelmann & Frank Wilkinson, 2013. "Prospects for the eurozone," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 463-477.
  11. Lars Feld, 2005. "The European constitution project from the perspective of constitutional political economy," Public Choice, Springer, vol. 122(3), pages 417-448, March.
  12. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
  13. Werner Bonefeld, 2013. "On the Strong Liberal State: Beyond Berghahn and Young," New Political Economy, Taylor & Francis Journals, vol. 18(5), pages 779-783, October.
  14. Jorg Bibow, 2009. "On the origin and rise of central bank independence in West Germany," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 16(1), pages 155-190.
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