Keynesian Measures Research Articles

Features of the New Type Global Recession

Research background: The increasing global economic decrease that got the name of Great Lockdown had world pandemic as its trigger. It is already obvious that by its depth, breadth and the number of economics included this recession can be compared to the Great Depression. Shocks nature influences a lot on the structural changes during the recession. The tertiary sector industries, which development is determined by globalization and that are typical for post-industrial economies have the heaviest losses. Now it is impossible to predict are the de-globalization processes permanent or just temporary and which changes in sectoral structure will stay with us after the COVID-19 pandemic. The period of sharp drop is finishing now and it’s obvious that the specific nature of current recession will reveal itself during the market adjustment to the new conditions. Purpose of the article: is to highlight the specific features of recession caused by COVID-19 pandemic, distinguishing it from the previous global recessions. Methods: this article research is based on comparative analysis of main macroeconomic variables trends during the global recessions. Findings & Value added: Current global recession specific features highlited in this article are: industries with a high share of employment are subject to the greatest compression; the economic recession took its origin as a result of the supply shock, and it has a clearly defined industry specifics. The growing uncertainty is limiting the recovery growth potential.; Keynesian measures of countercyclical regulation appeared to be ineffective during the release restrictions phase.

Trade Imbalances and Fiscal Policy in the Eurozone: An Analysis of Economic Interrelations with a Global Supermultiplier Input-Output Model

We investigate the potential of European-wide Keynesian policies as an alternative to the current neoliberal response to trade imbalances. In particular, we examine the implications for balancing trade of an uncoordinated fiscal policy expansion, and whether coordinated reflationary measures in core Eurozone countries could promote balanced trade and significant growth in peripheral countries. Accordingly, we analyse the structural interdependencies in income and trade between peripheral and central Eurozone countries, such as Spain and Germany. To this end, we employ a comprehensive set of accounting multipliers derived from a Keynesian supermultiplier model that accounts for interindustrial and interregional relations in a global setting. Computations rely on global input-output tables and national accounts that cover the years 1995 to 2014. We conclude that scepticism about the effectiveness of relying solely on Keynesian measures as an alternative to neoliberal policies in Europe is in order.

Managing the crises – how did local governments react to the financial crisis in 2008 and what explains the differences? The case of Swiss municipalities

Swiss municipalities are, to a large extent, responsible for their financial resources. Since these resources primarily depend on income and property taxes from individuals and enterprises, municipality budgets are likely to be directly affected by the current crisis in the financial sector and the economy. This article investigates how municipalities perceived this threat and how they reacted to it. In a nationwide survey conducted at the end of 2009 in all 2596 Swiss municipalities, we asked local secretaries which measures had been launched in order to cope with expected losses in tax income and a possible increase in welfare spending. Did the municipalities rely on Keynesian measures increasing public spending and accepting greater deficits, or did they try to avoid further deficits by using austerity measures and a withdrawal of planned investments? Our results show that only a few municipalities – mainly the bigger ones – expected to be greatly affected by the crisis. Their reactions, however, did not reveal any clear patterns that theory would lead one to expect. Preferences for austerity measures and deficit spending become visible but many municipalities took measures from both theories. The strongest explanatory factors for determining how/why municipalities react are: the municipality’s level of affectedness followed by whether or not the municipality belongs to the French-speaking part of the country. Size also has an impact, whereas the strength of the Social Democrat party is negligible. Explaining what kind of measures municipalities are likely to take is more difficult. However, the more a municipality is affected, the more likely it is to stick to austerity measures. Points for practitioners How to react to a financial crisis is not only a challenging question to answer for the scientific community but also for practitioners being confronted with the crucial decisions to be taken. This contribution shows that the theoretical debates stipulating the exclusiveness of deficit spending or austerity measures is hardly reflecting reality, at least not at the local level. Policymakers are well advised to cut down expenditure and to invest where necessary. This is, at least, what can be learned from the practices of the Swiss municipalities after the 2008 crisis.

Vulgarisation of Keynesianism in China's response to the global financial crisis

ABSTRACTWhen Keynesianism received renewed interest in the global financial crisis, some economists regarded China’s response as exemplary of effective Keynesian counter-cyclical strategy or even a non-crisis development strategy. At the same time, there have been critical voices against China’s Keynesian measures. This article therefore asks: To what extent was China’s response to the global financial crisis Keynesian? What factors determined the Chinese characteristics of Keynesian policy both in design and in implementation? It points out that China did follow a Keynesian formula in its crisis response, boosted infrastructure construction, GDP growth and created some employment. However, Chinese Keynesianism is a vulgarised version that is merged with its developmental state model. It simply boasted a big state and massive deficit spending, and socialised investment without really benefiting consumers or the private sector. This article also provides an analysis of how ideational and institutional politics in China vulgarised Keynesianism and exacerbated socio-economic problems. Ideational politics included the dominance of Keynesian discourse at the beginning of the crisis and an obsession with short-term results. Institutional factors included ‘firework’ local government politics, the state being captured by state-owned enterprises and a concentration of central distributive power without proper monitoring over implementation.

Are we all austerians now? An analysis of national parliamentary parties' positioning on anti-crisis measures in the eurozone

ABSTRACTWhich factors account for positioning of national parliamentary parties on anti-crisis measures implemented in the bailout states of the eurozone? The literature suggests that parties representing the economic ‘left’ are more likely to advocate Keynesian measures, whereas parties representing the economic ‘right’ tend to support the neoliberal ones. However, the current political discourse suggests that the choice of anti-crisis policies rather reflects the conflict of interests between euro states that received a bailout (debtors) and those who only provided financial guarantees (creditors). The empirical findings, based on (1) discourse analysis of national parliamentary debates and (2) the qualitative comparative analysis (QCA) model (crisp set), demonstrate that – next to the economic stance of a party – receipt of a bailout also accounts for parliamentary parties' positioning on anti-crisis measures. In particular, parliamentary parties in debtor states are likely to opt for Keynesian anti-crisis measures despite their right-wing economic stance or membership in the government.

Financial Crisis of 2008-2009 and Other Financial Crises: How to Manage Them?

Financial Crisis of 2008-2009 and Other Financial Crises: How to Manage Them?

From unemployment to rapid growth?

With unemployment in the OECD countries approaching 30 millions, and with the Mitterrand regime providing yet another example of the failure of demand-led attempts at growth, this article considers the possibility of the advanced industrialised countries returning to a pattern of rapid growth based on plentiful labour supplies. If Keynesian measures to combat high unemployment are rejected, will redundant labour eventually find its own demand, and will this allow a new wave of fast industrial expansion?

Effect of economic planning on business decisions

The fact that the United States has not faced an economic perplexity of current dimensions since the depression days hardly needs any emphasis. The current economic slowdown is significant because no recovery measures which may be applied to cure the economy are in sight. Since the Great Depression, especially after World War II, Keynes' economic theories have successfully been applied in the U.S., as also in other countries of the Free World, to put the economy back on path to recovery. Unfortunately, Keynesian measures do not seem to cope with the current economic woes. Apparently, new ways need to be sought and employed to get the economy back on track. Among many new ideas that have been advanced to restore economic growth, one is national economic planning by which the Government would play an active role in setting goals for the economy and devising means to reach them. The purpose of this paper is to report the findings of a study that the author undertook to probe the opinions of chief executive officers of the largest U.S. corporations on the whole idea of national economic planning in the United States. This study is based on interviews with 23 chief executives officers (CEOs) in different industries. Table 1 shows the background of these CEOs. Specifically, the author refers to such questions as: What positive and negative attitudes do the chief executive officers maintain toward national economic planning; what difficulties do they think will have to be surmounted to accomplish national economic planning in the U.S.; what influence may national economic planning have on various business decisions; and how may national economic planning affect corporate strategy?