A service of the

Forum

A New Economic Paradigm

The financial crisis of 2008-09 may have occurred a decade ago, but we are still dealing with the repercussions today, including a global populism wave. The crisis has also led to the demise of economists' unwavering belief in market efficiency that had guided economic policy for decades. Marcel Fratzscher, Moritz Schularick, Ottmar Edenhofer, Simon Tilford and Sebastian Dullien are among the many prominent economists in this Forum arguing that a new paradigm is urgently needed with new policies to address today's pressing issues, such as growing inequality, climate change and rising trade protectionism.

Editor's Choice

The EU-Japan Economic Partnership Agreement

On 17 July 2018, the EU-Japan Economic Partnership Agreement (EPA) was signed at the 25th summit between the European Union and Japan. The EU-Japan EPA comes at a difficult time for international trade liberalisation. Michael Frenkel and Benedikt Walter examine the relevance and content of the agreement with a view to global trade dynamics and assess its main trade policy implications.

Forum

Shifting Views on Trade Liberalisation

The analysis of several decades of trade liberalisation shows successes but also disappointed expectations. Sebastian Dullien illustrates the shifting views and policies on trade liberalisation and points out how changes in the perception of past outcomes are informing the policy recommendations of today.

Figure of the Month

Financial Crises, 1870-2015

This figure from Moritz Schularick and Kaspar Zimmermann's article Towards a New Paradigm: Stabilising Financial Markets shows that as financial markets have grown larger and more complete over the last 50 years, the incidence of financial crises has actually risen. Click on the figure for further information.

Letter from America

The Federal Job Guarantee

How do we eliminate unemployment altogether? William Darity Jr. and Darrick Hamilton propose implementing a federal job guarantee in the US in order to ensure that every American who wants to work has access to a high quality job with a decent living wage and the sense of dignity that comes with it.

Forum

A New Paradigm for Fiscal Policy?

Fiscal policy is about the role of the state in the economy. Xavier Ragot examines defines the old paradigm for fiscal policy within the framework of the recent financial crisis. Focusing on what went wrong in the business cycle, he considers a new paradigm and proposes some concrete changes, including a European unemployment reinsurance scheme.

Quote of the Month

Risk, Excess and Wastefulness

"The eurozone crisis is as much a tale of excess bank leverage and poor risk management in the core as of excess consumption and wasteful investment in the periphery."

from Simon Tilford and Christian Odendahl's Forum article Paradigm Shift in the Eurozone? The Market-Based Convergence Rationale

Article

ECB: Quo Vadis?

The European Central Bank has implemented a very ambitious monetary policy since the financial crisis of 2008, intervening heavily in the eurozone economies. This policy has generated substantial risks to both the ECB's primary task and its independence. Sylvester C. W. Eijffinger and Lex H. Hoogduin recommend a fundamental evaluation of the ECB's monetary policy strategy.

Forum

Paradigm Shifts in Economic Theory and Policy

In most countries, mainstream economic policy has not yet undergone any significant change, and there is little consensus on what, if anything, ought to replace it. However, Michael Jacobs and Laurie Laybourn-Langton argue that there are some signs of an emerging transition, at several levels.

Editor's Choice

A New Transatlantic Trade War?

This Forum's title and its assertion that "tension is mounting between the EU and the US... giving rise to fears of a full-blown transatlantic trade war and a new wave of global protectionism" could be ripped straight from today's headlines. It actually appeared in 2002. Wolfgang Ischinger's article "We Have Little to Gain from Trade Disputes, but Very Much to Lose" remains as relevant today as it was then.