Monetary Policy Crisis Management as a Threat to Economic Order

24 Pages Posted: 27 Mar 2017

See all articles by Andreas Freytag

Andreas Freytag

University of Jena - Department of Economics

Gunther Schnabl

University of Leipzig - Institute for Economic Policy

Date Written: March 01, 2017

Abstract

The paper analyses the effects of the monetary policy crisis management of the European Central Bank on the economic order of Germany. It is argued that in post-war Europe the German social market economy as designed by Eucken (1952) and Müller-Armack (1966) has been a core element of growth, welfare, social cohesion and political stability in Germany and Europe as a whole. It is shown that the monetary policy rescue measures of the European Central Bank have undermined the constitutive principles of the German social market economy, what has considerably contributed to the erosion of (productivity) growth and welfare in Germany and Europe. As the outcome is crumbling social cohesion and growing political instability, a timely exit from ultra-expansionary monetary policy is postulated.

Keywords: economic order, social market economy, Soziale Marktwirtschaft, Germany, Walter Eucken, Alfred Müller-Armack, monetary policy, crisis management

JEL Classification: B200, E140, B250

Suggested Citation

Freytag, Andreas and Schnabl, Gunther, Monetary Policy Crisis Management as a Threat to Economic Order (March 01, 2017). CESifo Working Paper Series No. 6363, Available at SSRN: https://ssrn.com/abstract=2941383

Andreas Freytag

University of Jena - Department of Economics ( email )

Carl-Zeiss-Str. 3
07743 Jena
Germany

Gunther Schnabl (Contact Author)

University of Leipzig - Institute for Economic Policy ( email )

Institute for Economic Policy
Grimmaische Straße 12
Leipzig, 04109
Germany

HOME PAGE: http://www.wifa.uni-leipzig.de/iwp/

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