The real problem with German macroeconomic policy – Simon Wren Lewis – Mainly Macro

Oxford economist, Simon Wren-Lewis, in his Mainly Macro blog, defends German economic policy from recent criticisms leveled by Nobel Prize winning economist, Paul Krugman, in his NYT blog. This is a MUST READ article in my view. Check it out!

mainly macro: The real problem with German macroeconomic policy.

Apart from two fundamental defenses of German economic policy, Wren-Lewis identifies three important myths which unpin German policy. Simply, German policy is based on too much ordaliberalism; this is the German version of neoliberalism  which is heavily influenced by 20th century German history and German philosophy.

In my view, Germany is going too be slow to reflate her economy which will consign Southern Europe to years of unnecessarily severe austerity. The alternative of a fiscal compact and the ECB acting like a real central bank and lender of last resort just seems politically unacceptable.

Let me turn this to an open question:

European flag outside the Commission

European flag outside the Commission (Photo credit: Wikipedia)

With the right-wing backlash across Europe against the European Commission, do you think that Germany will be forced to offer further economic concessions?

Any thoughts?

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3 responses

  1. Pingback: UK banks and the productivity puzzle: it may not just be about limited lending – Simon Wren-Lewis -Mainly Macro « Dr Alf's Blog

  2. Pingback: The view from Germany -Simon Wren Lewis – Mainly Macro « Dr Alf's Blog

  3. In essence Germany is a advanced industrial nation as shown by their history and to the present day, other countries such as Greece, are ether agricultural or the have attributes that cannot be compared with large scale economics and machinery, such as Mercedes Benz, and so on, it is not realistic to compare a manufacturing society such as Germany to other countries that have greater beauty in terms of their natural assets that have been not so developed as those with extensive machinery and over industrialization, and natural assets should not have to compete with the latter mentioned as those who work the machinery and office duties, need to have a relationship with those I suggest.

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