nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2009‒12‒11
three papers chosen by
Karl Petrick
University of the West Indies

  1. "Sustaining Recovery--Medium-term Prospects and Policies for the U.S. Economy" By Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
  2. "The Euro and Its Guardian of Stability--The Fiction and Reality of the 10th Anniversary Blast" By Joerg Bibow
  3. The Global Financial Crisis And After: A New Capitalism? By Pereira, Luiz Carlos Bresser

  1. By: Dimitri B. Papadimitriou; Greg Hannsgen; Gennaro Zezza
    Abstract: Though recent market activity and housing reports give some warrant for optimism, United States economic growth was only 2.8 percent in the third quarter, and the unemployment rate is still very high. In their new Strategic Analysis, the Levy Institute's Macro-Modeling Team project that high unemployment will continue to be a problem if fiscal stimulus policies expire and deficit reduction efforts become the policy focus. The authors--President Dimitri B. Papadimitriou and Research Scholars Greg Hannsgen and Gennaro Zezza--argue that continued fiscal stimulus is necessary to reduce unemployment. The resulting federal deficits would be sustainable, they say, as long as they were accompanied by a coordinated and gradual devaluation of the dollar, especially against undervalued Asian currencies--a step necessary to prevent an increase in the current account deficit and ward off the risk of a currency crash.
    Date: 2009–12
  2. By: Joerg Bibow
    Abstract: This paper investigates why Europe fared particularly poorly in the global economic crisis that began in August 2007. It questions the self-portrait of Europe as the victim of external shocks, pushed off track by reckless policies pursued elsewhere. It argues instead that Europe had not only contributed handsomely to the buildup of global imbalances since the 1990s and experienced their implosive unwinding as an internal crisis from the beginning, but that it had also nourished its own homemade intra-Euroland and intra-EU imbalances, the simultaneous implosion of which has further aggravated Europe's predicament. To keep its own house in order in the future, Euroland must shun the outdated "stability oriented" policy wisdom inherited from Germany's mercantilist past and Bundesbank mythology. Steps toward a fiscal union to back the euro are also warranted.
    Keywords: Economic and Monetary Union; Euro; European Central Bank; Global Imbalances; Global Crisis; Intra-area Imbalances; Competitiveness Positions; Policy Coordination; Tax-push Inflation; Financial Supervision; Mercantilism
    JEL: E30 E42 E52 E58 E61 E63 E65 F36
    Date: 2009–12
  3. By: Pereira, Luiz Carlos Bresser
    Abstract: The 2008 global financial crisis was the consequence of the process offinancialization, or the creation of massive fictitious financial wealth, that began in the1980s, and of the hegemony of a reactionary ideology, namely, neoliberalism, based on selfregulatedand efficient markets. Although capitalism is intrinsically unstable, the lessonsfrom the stock-market crash of 1929 and the Great Depression of the 1930s weretransformed into theories and institutions or regulations that led to the “30 glorious years ofcapitalism” (1948–77) and that could have avoided a financial crisis as profound as thepresent one. It did not because a coalition of rentiers and “financists” achieved hegemonyand, while deregulating the existing financial operations, refused to regulate the financialinnovations that made these markets even more risky. Neoclassical economics played therole of a meta-ideology as it legitimized, mathematically and “scientifically”, neoliberalideology and deregulation. From this crisis a new capitalism will emerge, though itscharacter is difficult to predict. It will not be financialized but the tendencies present in the30 glorious years toward global and knowledge-based capitalism, where professionals willhave more say than rentier capitalists, as well as the tendency to improve democracy bymaking it more social and participative, will be resumed.
    Date: 2009–12–04

This nep-pke issue is ©2009 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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