Abstract
We contribute to the recent debates on demand and growth regimes in modern finance-dominated capitalism linking them to the post-Keynesian research on macroeconomic policy regimes. We examine the demand and growth regimes, as well as the macroeconomic policy regimes for the big four Eurozone countries, France, Germany, Italy and Spain, for the periods 2001–2009 and 2010–2019. First, our approach supports the usefulness of the identification of demand and growth regimes according to growth contributions of the main demand components and financial balances of the macroeconomic sectors. This allows for an understanding of the demand sources of growth, or stagnation, if there is a lack of demand, of how these sources are financed and of potential financial instabilities and fragilities. Second, when it comes to the macroeconomic policy drivers of demand and growth regimes, as well as their respective changes, we show that the exclusive focus on fiscal policies, as in the previous literature, is too limited and that it is the macroeconomic policy regime which matters here, i.e. the combination of monetary, fiscal and wage policies, as well as the open economy conditions.
Highlights
Post-Keynesian research on the macroeconomics of financialisation, or on finance-dominated capitalism, has generated the notion of ‘demand and growth regimes under financialisation’
This allows for an understanding of the demand sources of growth, or stagnation, if there is a lack of demand, of how these sources are financed and of potential financial instabilities and fragilities. When it comes to the macroeconomic policy drivers of demand and growth regimes, as well as their respective changes, we show that the exclusive focus on fiscal policies, as in the previous literature, is too limited and that it is the macroeconomic policy regime which matters here, i.e. the combination of monetary, fiscal and wage policies, as well as the open economy conditions
We have tried to contribute to the recent debate on demand and growth regimes in modern finance-dominated capitalism, linking it with the post-Keynesian research on macroeconomic policy regimes in order to understand the role of macroeconomic policies for the changes in demand and growth regimes
Summary
Post-Keynesian research on the macroeconomics of financialisation, or on finance-dominated capitalism, has generated the notion of ‘demand and growth regimes under financialisation’. Kohler and Stockhammer (2021) have recently provided a more systematic crosscountry analysis of the underlying growth drivers before and after the 2007–2009 crises in 30 OECD countries They consider the requirements of deleveraging in the context of a financial boom-bust cycle, the role of fiscal policies and the relevance of price and non-price competitiveness for exports in order to explain the emergence of the different post-crisis regimes. This approach is based on postKeynesian macroeconomics in general and the requirement of coordinated macroeconomic policies derived from this approach in particular (Arestis 2013; Hein and Stockhammer 2010) Applying this approach in a standardised way using the same sets of indicators for the big four Eurozone countries, France, Germany, Italy and Spain, should shed some more light on the economic policy drivers of the respective demand and growth regimes, which have led to the 2007–2009 crises, and the regime shift thereafter.
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