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How Germany's Anti-Keynesianism Has Brought Europe to Its Knees

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  • Jorg Bibow

Abstract

This paper investigates the (lack of any lasting) impact of John Maynard Keynes's General Theory on economic policymaking in Germany. The analysis highlights the interplay between economic history and the history of ideas in shaping policymaking in postwar (West) Germany. The paper argues that Germany learned the wrong lessons from its own history and misread the true sources of its postwar success. Monetary mythology and the Bundesbank, with its distinctive anti-inflationary bias, feature prominently in this collective odyssey. The analysis shows that the crisis of the euro today is largely the consequence of Germany's peculiar anti-Keynesianism.

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  • Jorg Bibow, 2017. "How Germany's Anti-Keynesianism Has Brought Europe to Its Knees," Economics Working Paper Archive wp_886, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_886
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    References listed on IDEAS

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    1. Keynes, John Maynard, 1919. "The Economic Consequences of the Peace," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number keynes1919.
    2. Issing,Otmar, 2008. "The Birth of the Euro," Cambridge Books, Cambridge University Press, number 9780521731867, January.
    3. Jorg Bibow, 2005. "Germany in crisis: the unification challenge, macroeconomic policy shocks and traditions, and EMU," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(1), pages 29-50.
    4. C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15, April.
    5. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    6. Issing,Otmar, 2008. "The Birth of the Euro," Cambridge Books, Cambridge University Press, number 9780521516730, January.
    7. Dyson, Kenneth & Featherstone, Kevin, 1999. "The Road To Maastricht: Negotiating Economic and Monetary Union," OUP Catalogue, Oxford University Press, number 9780198296386.
    8. Feld, Lars P. & Köhler, Ekkehard A. & Nientiedt, Daniel, 2015. "Ordoliberalism, pragmatism and the eurozone crisis: How the German tradition shaped economic policy in Europe," Freiburg Discussion Papers on Constitutional Economics 15/04, Walter Eucken Institut e.V..
    9. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
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    Cited by:

    1. Michalis Nikiforos & Gennaro Zezza, 2017. "Towards an Understanding of the Greek Crisis and the Flawed Analyses of the Levy Economics Institute’s Publications: A Reply," Forum for Social Economics, Taylor & Francis Journals, vol. 46(3), pages 311-314, July.
    2. Feld, Lars P. & Köhler, Ekkehard A. & Nientiedt, Daniel, 2021. "The German Anti-Keynes? On Walter Eucken’S Macroeconomics," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(4), pages 548-563, December.
    3. Jörg Bibow, 2018. "Unconventional monetary policies and central bank profits," IMK Studies 62-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Jörg Bibow, 2019. "20 years of the German euro are more than enough," Revista de Economia Critica, Asociacion de Economia Critica, vol. 27, pages 32-46.
    5. Sascha Keil & Walter Paternesi Meloni, 2024. "Kaldorian cumulative causation in the Euro area: an empirical assessment of divergent export competitiveness," Chemnitz Economic Papers 063, Department of Economics, Chemnitz University of Technology.
    6. George K. Zestos & Rachel N. Cooke, 2020. "Challenges for the EU as Germany Approaches Recession," Economics Working Paper Archive wp_948, Levy Economics Institute.
    7. Zestos, George & Simmons, Morgan H., 2018. "Why a Eurozone Collapse should not be a Surprise: The Role of Germany and Greece," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(3), pages 227-256.
    8. Stefano Figuera & Guglielmo Forges Davanzati & Andrea Pacella, 2022. "Considerations on the Legacy of Ordoliberalism in European Monetary Policy," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2022(2), pages 95-122.
    9. Sébastien Charles & Thomas Dallery & Jonathan Marie, 2021. "Covid-19 and interweaving of crises: Restoring Keynesianism in order to rebuild macroeconomic policy [Covid-19 et imbrication des crises : réhabiliter le keynésianisme pour refonder la politique ma," Post-Print hal-03148074, HAL.

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    More about this item

    Keywords

    John Maynard Keynes; Mercantilism; Economic and Monetary Union; Euro Crisis;
    All these keywords.

    JEL classification:

    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • 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
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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