The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union

39 Pages Posted: 8 May 2018

See all articles by Sebastian Mueller

Sebastian Mueller

University of Leipzig - Institute for Economic Policy

Gunther Schnabl

University of Leipzig - Institute for Economic Policy

Date Written: March 14, 2018

Abstract

We analyze the effects of the increasingly expansionary monetary policies on the economic order and on the European integration process. We argue that the market orders shaped in postwar Germany and in Margret Thatcher’s United Kingdom have long served as cornerstones for growth, prosperity and social cohesion in Europe. It is shown that the monetary policies of the European Central Bank and the Bank of England have undermined these orders, thereby eroding productivity gains and growth. Combined with negative distribution effects, ultra-loose monetary policies constitute the breeding ground for divergence forces in the European Union as heralded by the Brexit.

Keywords: European integration, economic order, Walter Eucken, Friedrich August von Hayek, Margret Thatcher, inequality, monetary policy, political polarization, divergence, Brexit

JEL Classification: B250, E580, E650

Suggested Citation

Mueller, Sebastian and Schnabl, Gunther, The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union (March 14, 2018). CESifo Working Paper Series No. 6938, Available at SSRN: https://ssrn.com/abstract=3172679

Sebastian Mueller

University of Leipzig - Institute for Economic Policy ( email )

Marschnerstrasse 31
D-04109 Leipzig, 04109
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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