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The latest news, debates, proposals and developments on new economic thinking at a glance.
In a recent twitter thread, Olivier Blanchard argued that there is a distributional conflict lying at the heart of inflation between workers, firms, and taxpayers. Taking this Post-Keynesian perspective, opens the room for the state when it comes to the most efficient policy response to recent inflationary episodes. Leaving the task to solve a distributional conflict to the central bank alone then seems to be highly inefficient.
His tweet has sparked a hot debate on Econtwitter about the roots of inflation and how to tackle them best. For a short summary, read the blog post by Claudia Sahm here.
Cost of living crisis, ecological emergency and war are some of the new challenges facing Europe. How should the EU economic governance framework change to allow Europe to become stronger, more sustainable and resilient to face these challenges? Finance Watch, Heinrich Böll Stiftung Brussels and the New Economic Foundations are hosting a conference to discuss the ongoing review of the framework.
When? 24 January, 16:00-18:00 pm
Where? In Brussels (Press Club) or online
More information and registration here.
Fiscal policy: Relieve the burden more precisely! – Article (German)
Achim Truger, Wirtschaftsdienst, 16.12.2022
German fiscal policy is facing the next big challenge because of the Ukraine war and the energy crisis. The fiscal effects of the corona pandemic have not yet finally subsided.
Why the Age of American Progress Ended – Article
Derek Thompson, The Atlantic, 12.12.2022
Invention alone can’t change the world; what matters is what happens next.
The UK government’s policy on public sector pay is foolish – Opinion piece
Martin Wolf, Financial Times, 11.12.2022
Letting inflation reduce real wages while expecting services to be maintained is dishonest.
It’s time for a big justice check – Article (Paywall, German)
Heribert Prantl, Süddeutsche Zeitung, 10.12.2022
The nobility has been abolished. The moneyed aristocracy, however, lives and thrives. This is the effect of inheritance tax law: the larger the inheritance, the smaller the tax.
Systemic inflation drivers (and what to do about them) – Article
Robin Wigglesworth, Financial Times, 08.12.2022
Is inflation truly only a macro phenomenon?
Where next for Europe’s industry? – Opinion piece
Martin Sandbu, Financial Times, 08.12.2022
More evidence that factories have weathered the energy crisis well.
Finance and the polycrisis – Fed effects & European corporate bond market – Blogpost
Adam Tooze, 23.11.2022
Though the polycrisis may deliver shocks from different directions, if history has confirmed anything in 2022, it is that the dollar credit-cycle remains a common denominator of much of the world economy.
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When are public finances (legally) sound? -Blog post (German)
Max Krahé & Philipp Orphal, Makronom, 28.11.2022
The term “sound public finances” is often used without really being filled with life. Yet the definition is central to European and national fiscal policy.
The wealthy who like the idea of a wealth tax – Opinion piece
Martin Sandbu, Financial Times, 24.11.2022
The moneyed classes are beginning to think governments have been too kind to them.
33 per cent for oil and gas companies: This is Lindner’s plan for an excess profits tax – Article (Paywall, German)
Martin Greive & Julian Olk, Handelsblatt, 23.11.2022
The Finance Minister did not want a general excess profits tax, but now has to implement one for oil and gas companies. However, he does not want to call it that.
The Resistible Rise of Germany’s Far Right – Article
Dalia Marin, Project Syndicate, 22.11.2022
As nationalist parties gain power across Europe, Germany’s own populist surge has remained confined to its deindustrialized east. This is because the country has benefited more from globalization than other developed countries – and it could benefit from deglobalization as well.
Europe’s Fiscal Framework. The people’s view? – Policy Paper
Frank van Lerven, Dominic Caddick, Sebastian Mang, New Economics Foundation, 04.11.2022
How austerity made us poorer and less able to cope with crises.
OUR MAIN TOPICS
New Paradigm
NEW PARADIGM
After decades of overly naive market belief, we urgently need new answers to the great challenges of our time. More so, we need a whole new paradigm to guide us. We collect everything about the people and the community who are dealing with the question of a new paradigm and who analyze the historical and present impact of paradigms and narratives – whether in new contributions, performances, books and events.
Redefining
the role of
the state
REDEFINING
THE ROLE OF
THE STATE
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
Remaking
finance
REMAKING
FINANCE
More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.
Greening
prosperity
GREENING
PROSPERITY
During the high point of market orthodoxy, economists argued that the most 'efficient' way to combat climate change was to simply let markets determine the price of carbon emissions. Today, there is a growing consensus that prices need to be regulated and that a carbon price on its own might not be enough.
Reducing
inequality
REDUCING
INEQUALITY
The rising gap between rich and poor has become a threat to social cohesion in most rich countries. To reverse this trend it will be crucial to better understand the importance of different drivers of income and wealth inequality.
Innovation Lab
INNOVATION LAB
Do we need a whole new understanding of economic growth? What would be a real alternative? How viable are alternatives to GDP when it comes to measuring prosperity? These and other more fundamental challenges are what this section is about.
Globalization
for all
GLOBALIZATION
FOR ALL
After three decades of poorly managed integration, globalization is threatened by social discontent and the rise of populist forces. A new paradigm will need better ways not only to compensate the groups that have lost, but to distribute the gains more broadly from the start.
Europe
beyond markets
EUROPE
BEYOND MARKETS
The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.
Corona Crisis
CORONA CRISIS
The current Corona crisis is probably the worst economic crisis of the post-World War 2 era. Economists are working hard on mitigating the economic effects caused by COVID-19 to prevent a second Great Depression, the break-up of the Eurozone and the end of globalisation. We collect the most important contributions.