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The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union

Author

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  • Schnabl Gunther

    (Universität Leipzig, Institut für Wirtschaftspolitik, Grimmaische Straße 12, 04109 Leipzig, Germany)

  • Müller Sebastian

    (Universität Leipzig, Institut für Wirtschaftspolitik, Grimmaische Straße 12, 04109 Leipzig, Germany)

Abstract

The paper analyzes the effects of the increasingly expansionary monetary policies on the economic order in Europe and the European integration process. It is argued that a liberal market order and a tight monetary policy stance shaped in postwar Germany and in United Kingdom have long served as cornerstones for growth, prosperity and social cohesion in Europe. A prolonged loose monetary policy stance of the European Central Bank has undermined these orders, thereby diminishing productivity gains and growth. Combined with negative distribution effects, those monetary policies constitute the breeding ground for divergence forces in the European Union as heralded by the Brexit.

Suggested Citation

  • Schnabl Gunther & Müller Sebastian, 2019. "The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union," The Economists' Voice, De Gruyter, vol. 16(1), pages 1-18, December.
    • Handle: RePEc:bpj:evoice:v:16:y:2019:i:1:p:18:n:13
    DOI: 10.1515/ev-2019-0029
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    Cited by:

    1. Israel, Karl-Friedrich & Sepp, Tim Florian & Sonnenberg, Nils, 2023. "The effects of unconventional monetary policy on stock markets and household incomes in Japan," Working Papers 177, University of Leipzig, Faculty of Economics and Management Science.
    2. Thomas Mayer & Gunther Schnabl, 2023. "How to escape from the debt trap: Lessons from the past," The World Economy, Wiley Blackwell, vol. 46(4), pages 991-1016, April.
    3. Karl-Friedrich Israel & Tim Florian Sepp & Nils Sonnenberg, 2023. "The Effects of Unconventional Monetary Policy on Stock Markets and Household Incomes in Japan," Post-Print halshs-04024219, HAL.
    4. Taiki Murai & Gunther Schnabl, 2021. "Macroeconomic Policy Making and Current Account Imbalances in the Euro Area," CESifo Working Paper Series 9153, CESifo.
    5. Schnabl, Gunther, 2018. "70 years after the German currency and economic reform: The monetary, economic and political order in Europe is disturbed," Working Papers 156, University of Leipzig, Faculty of Economics and Management Science.
    6. Schnabl Gunther, 2020. "Soziale Marktwirtschaft damals und heute," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(1), pages 1-24, May.

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    More about this item

    Keywords

    Brexit; divergence; economic order; European Integration; Friedrich August von Hayek; inequality; Ludwig Erhard; Margret Thatcher; monetary policy; political polarization;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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