Suchergebnisse

The Euro -- Preface -- Contents -- List of Figures -- List of Tables -- List of Boxes -- 1 Eurozone Crises -- 2 'Optimal' Currency Area: What Does It Mean? -- Introduction -- A Euro Is Not Just a Means of Payment -- A Brief Definition -- An Overall Macroeconomic Debate -- Evaluation of an 'Optimal Currency Area' -- Appendix: Two Schools of Euro-Macroeconomics -- Note -- 3 Why Was the EMU Established? Different Perspectives -- Introduction -- A 'Common' European Currency Became a Political Project Supported by the Euro-monetarists -- Convergence Criteria without Convergence

The paper contains two separate 'components'. The first is very broadly related to the question why and how macroeconomic theorists differ. It is argued that 4 different schools could be set out. The dividing lines are determined by the overall view on how well a full scale market system does function. At one end of the theoretical spectrum one finds the very market optimists, at the other end the 'old' keynesians who consider the market economic system as fundamentally unstable. In between we find New Keynesian economists and soft monetarists. Conclusions with regard to the benefits of the EMU are highly differentiated among the different Schools and by their views on the necessity of pursuing an active overall economic policy. The other paper is about how well the theory of 'optimal currency areas' (OCA) as a tool for understanding the costs and benefits of the EMU fits into the different schools. Outside Europe many economists have accepted the OCA theory as a good starting point which, of course, is dismissed by the 'real business cycle economists' and 'fundamental Keynesians'. This split also explains some of the differences with regard to the conclusions on the EMU. The paper has no firm opinion on the relationship between researchers political stand and their choice of economic theoretical school.

Alain Parguez is right when he claims that the "euro" is a political failure and an economic disaster, in which French politicians and economists seem to have played a significant role. France's elite envisaged being a dominant political power on the Continent after the two military defeats of Germany in 1918 and 1945. The two strategies the elite tried were very different, but they both failed. A heavy war indemnity in 1919 and the common European currency in 1990 were seen by the French elite as instruments to suppress Germany's potential economic (and political) superiority. The French economic elite, represented by F. Perroux and Jacques Rueff, supported the elite's aspiration of being the leading power within a united Europe by academic arguments. The academic support for the Mitterrand government's European Union (EU) policy was organized by the former economics and finance minister (and later president of the European Commission), Jacques Delors. He headed the Committee for the Study of Economic and Monetary Union, which unanimously recommended a common European currency "to the benefit of European prosperity." According to Parguez, the resulting common currency created at a French initiative is the prime reason for the present European economic defeat, which has frustrated the French aspiration to play a leading role as primus inter pares on the Continent. This is so because the rules we are bound to follow make no economic sense for Europe as a whole, which is collectively denied by the European elites. This short commentary discusses whether the economic profession not only in France, but in general, is incompetent, ideologically biased, or simply a "rent seeking" profession. ; Alain Parguez is right when he claims that the "euro" is a political failure and an economic disaster, in which French politicians and economists seem to have played a significant role. France's elite envisaged being a dominant political power on the Continent after the two military defeats of Germany in 1918 and 1945. The two strategies the elite tried were very different, but they both failed. A heavy war indemnity in 1919 and the common European currency in 1990 were seen by the French elite as instruments to suppress Germany's potential economic (and political) superiority. The French economic elite, represented by F. Perroux and Jacques Rueff, supported the elite's aspiration of being the leading power within a united Europe by academic arguments. The academic support for the Mitterrand government's European Union (EU) policy was organized by the former economics and finance minister (and later president of the European Commission), Jacques Delors. He headed the Committee for the Study of Economic and Monetary Union, which unanimously recommended a common European currency "to the benefit of European prosperity." According to Parguez, the resulting common currency created at a French initiative is the prime reason for the present European economic defeat, which has frustrated the French aspiration to play a leading role as primus inter pares on the Continent. This is so because the rules we are bound to follow make no economic sense for Europe as a whole, which is collectively denied by the European elites. This short commentary discusses whether the economic profession not only in France, but in general, is incompetent, ideologically biased, or simply a "rent seeking" profession.

Mainstream economists claim that economics is an objective and empirically tested science – contrary to the humanities and soft social sciences. According to this view, economics is beyond the influence of ideology. It represents the rational way of analysing economic welfare – not influenced by political consideration. Therefore, it is explicitly stated within the Treaty of Lisbon that the board of directors of the European Central Bank must not take any direct instructions from the European Council to secure objectivity in the European monetary policy. Unfortunately, economic theory is not neutral. It cannot be separated from the vision and the fundamental assumptions which lay behind the economic model employed when policies are decided upon. The so-called general equilibrium model is firmly relying on market theory and ordo-/neoliberal ideology. ; Mainstream economists claim that economics is an objective and empirically tested science – contrary to the humanities and soft social sciences. According to this view, economics is beyond the influence of ideology. It represents the rational way of analysing economic welfare – not influenced by political consideration. Therefore, it is explicitly stated within the Treaty of Lisbon that the board of directors of the European Central Bank must not take any direct instructions from the European Council to secure objectivity in the European monetary policy. Unfortunately, economic theory is not neutral. It cannot be separated from the vision and the fundamental assumptions which lay behind the economic model employed when policies are decided upon. The so-called general equilibrium model is firmly relying on market theory and ordo-/neoliberal ideology.

This paper explains how short- and medium-term macroeconomic projections are undertaken within the Danish Ministry of Finance (DMF) by the use of an annual macroeconometric model, ADAM, together with a theoretical, structural general equilibrium model, DREAM.* DREAM** is used to calculate the structural public sector budget deficit, which by law is required never to exceed ½ percent of GDP. This legal restriction on fiscal policy gives the structural model (and the 'model-operators') a hitherto unseen political power. This 'institutional' status of DREAM causes a number of questions about democracy to be asked. First, why has an elected government accepted to surrender its legal right to undertake an active fiscal policy? Secondly, how can it be that DREAM – a neoliberal general equilibrium model without proper empirical tests and operated by anonymous civil servants – has been elevated to a position akin to a high court's? The paper demonstrates how this model set-up within the DMF reproduces reality poorly. Therefore, these models should rather be seen as social constructs predetermined be neoclassical/neoliberal economic theory, which has to be acknowledged as a democratic challenge. ; This paper explains how short- and medium-term macroeconomic projections are undertaken within the Danish Ministry of Finance (DMF) by the use of an annual macroeconometric model, ADAM, together with a theoretical, structural general equilibrium model, DREAM.* DREAM** is used to calculate the structural public sector budget deficit, which by law is required never to exceed ½ percent of GDP. This legal restriction on fiscal policy gives the structural model (and the 'model-operators') a hitherto unseen political power. This 'institutional' status of DREAM causes a number of questions about democracy to be asked. First, why has an elected government accepted to surrender its legal right to undertake an active fiscal policy? Secondly, how can it be that DREAM – a neoliberal general equilibrium model without proper empirical tests and operated by anonymous civil servants – has been elevated to a position akin to a high court's? The paper demonstrates how this model set-up within the DMF reproduces reality poorly. Therefore, these models should rather be seen as social constructs predetermined be neoclassical/neoliberal economic theory, which has to be acknowledged as a democratic challenge.