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on Post Keynesian Economics |
| By: | Sergio Cesaratto |
| Abstract: | It is not easy to untangle the logic that in the past led to creation of the European Monetary Union (EMU) and that is currently guiding the prevailing Eurozone (EZ) policies. Although lacking the right institutions, which can be seen as the ultimate root of its crisis, the ten years of the EMU could be celebrated in 2008 with some fanfare. The EMU even seemed a success, judged from the point of view of imbalanced growth of some peripheral countries that masked its deflationary stance. This imbalanced growth was the proximate cause of the EZ financial crisis. In the paper we shall review the main causes of the EZ financial crisis, interpreted as a balance of payments crisis; the role of the European payment system TARGET 2 in buffering its violent blast; the Classical-Kaleckian rationale of the German malevolent mercantilism; the inadequate EZ policy measures to respond to the crisis; possible alternative solutions. Unfortunately, rather than pushing towards the creation of a different set of European institutions, the prevailing crisis resolution philosophy resembles a late vindication of the original deflationary Euro-bias. |
| Keywords: | European Monetary Union, financial crisis, Germany, neo-mercantilism, balance of payment,capital flows, sudden stops, TARGET 2, OMT |
| JEL: | E11 E12 E42 E58 F32 F33 F34 F36 N24 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:671&r=pke |
| By: | Sunanda Sen |
| Abstract: | The recent declines in China's financial account balance ended the "twin surplus" era and led to a modest decline in the stock of official reserves, which reflects a reversal in expectations for the Chinese currency. Negative balances, which have been visible in China's financial balances since the last quarter of 2011, have heightened fears/anxiety in markets. These deficits stand in sharp contrast to the typical financial account surplus that existed until 2010. The announcement in September 2011 by Chinese monetary authorities of a "two-way floating" RMB in the foreign exchange market has unsettled market expectations and has led to a sharp fall in the financial balance. The latter brought a change in the expectations regarding the RMB-USD exchange rate. This change was reflected in the drop in foreign exchange assets, which was caused by a jump in short-term trade credits to prepay (for imports) in dollars, a rise in dollar advances from banks, and a withdrawal of dollar deposits. These changes have, of late, been a cause of concern relating to the future of China's economic relations vis-a-vis trading and financial partners, which include the United States. The experience of China, in a changing world beset with deregulation and with speculation affecting her external balance in recent years, provides further confirmation of John Maynard Keynes's observation, in 1937, regarding uncertainty in markets: "About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know." |
| Keywords: | China; Financial Balances; Official Reserves; Twin Surpluses; Rebalancing; Expectations; Internationalization; Managed Exchange Rate |
| JEL: | E31 E52 F42 O16 O53 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_761&r=pke |
| By: | Jorg Bibow |
| Abstract: | Highlighting that France and Germany held largely contradicting hopes and aspirations for Europe's common currency, this paper analyzes how the resulting euro contradiction conditioned the ongoing euro crisis as well as current strategies to resolve it. While Germany generally prevailed in hammering out the design of the euro policy regime, the German authorities have failed to see the inconsistency in their policy endeavors: the creation of a model whose workability presupposes that others behave differently cannot be made to work by forcing everyone to behave like Germany. This fundamental misunderstanding has made Germany the main culprit in the euro crisis, but it has yet to face the full consequences of its actions. Germany had sought every protection against the much-dreaded euro "transfer union," but its own conduct has made that very outcome inevitable. Conversely, having been disappointed in its own hopes for the euro, France is now facing the prospect of a lost generation-a prospect, shared with other debtor nations in the union, that has undermined the Franco-German alliance and may soon turn it into the ultimate euro battleground. |
| Keywords: | Currency Union; Euro Policy Regime; Euro Crisis; Franco-German Partnership; Competitiveness; ECB Policies |
| JEL: | E02 E42 E58 E61 E65 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_762&r=pke |
| By: | Maddaremmeng A. Panennungi (Department of Economics, Faculty of Economics, University of Indonesia) |
| Abstract: | This paper is aimed at investigating the impact of globalization in Indonesia from long term recorded history. The methodology in this paper is focused on the literature survey with the qualitative analysis. The result shows that the presence of globalization in Indonesia tends to put the relationship between Indonesia (Nusantara or Netherland Indies) and the great power/globalizer as the Periphery-Centre (Core) relationship. It is shown that the globalizer influences Indonesia and not the other way around. The positive effect on Indonesia is globalization could increase people’s wealth and enrich Indonesia’s civilization without losing the real Indonesian culture. However, the presence of negative effect, could be very devastating, such as war and internal conflicts, in the time of clash among great powers/globalizers or in the time of changing time of influence from old great power to the new one. |
| Keywords: | Globalization, Indonesia |
| JEL: | F0 N95 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:wpecbs:201303&r=pke |