I N T E R N AT I O N A L PA P E R S I N P O L I T I C A L E C O N O M Y Economic Policies Since the Global Financial Crisis Edited by Philip Arestis and Malcolm Sawyer www.ebook3000.com International Papers in Political Economy Series Editors Philip Arestis University of Cambridge Cambridge, United Kingdom Malcolm Sawyer University of Leeds Leeds, United Kingdom This is the fourteenth volume of the series International Papers in Political Economy (IPPE) This series consists of an annual volume with a single theme The objective of the IPPE is the publication of papers dealing with important topics within the broad framework of Political Economy The original series of International Papers in Political Economy started in 1993, until the new series began in 2005, and was published in the form of three issues a year with each issue containing a single extensive paper Information on the old series and back copies can be obtained from the editors: Philip Arestis (pa267@cam.ac.uk) and Malcolm Sawyer (e-mail: m.c.sawyer@lubs.leeds.ac.uk) More information about this series at http://www.springer.com/series/14844 www.ebook3000.com Philip Arestis • Malcolm Sawyer Editors Economic Policies since the Global Financial Crisis Editors Philip Arestis University of Cambridge Cambridge, United Kingdom Malcolm Sawyer University of Leeds Leeds, United Kingdom International Papers in Political Economy ISBN 978-3-319-60458-9 ISBN 978-3-319-60459-6 (eBook) DOI 10.1007/978-3-319-60459-6 Library of Congress Control Number: 2017951854 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland www.ebook3000.com Preface This is the fourteenth volume of the series of International Papers in Political Economy (IPPE) This series consists of an annual volume with eight papers on a single theme The objective of the IPPE is the publication of papers dealing with important topics within the broad framework of Political Economy The original series of International Papers in Political Economy started in 1993 until the new series began in 2005 and was published in the form of three issues a year, each issue containing a single extensive paper Information on the old series and back copies can be obtained from the editors Philip Arestis (e-mail: pa267@cam.ac.uk) and Malcolm Sawyer (e-mail: m.c.sawyer@lubs.leeds.ac.uk) The theme of this volume of eight papers is Economic Policies Since the Global Financial Crisis The papers in this volume were initially presented at a one-day conference in Cambridge, UK (St Catharine’s College), 30 March 2017 The conference was organized by the Department of Land Economy, University of Cambridge, under the aegis of the Cambridge Trust for New Thinking in Economics, entitled Economic Policies Since the Global Financial Crisis The Cambridge Trust for New Thinking in Economics fully supported and financed the conference The papers were subsequently presented at the 14th International Conference, entitled v vi Preface Developments in Economic Theory and Policy, held at the University of the Basque Country UPV/EHU, Bilbao, Spain, 26–27 June 2017, which fully supported and funded the special sessions to which the papers included in this volume were presented We are grateful to the organizers of the Bilbao conference and to the Cambridge Trust for all the help and funding provided www.ebook3000.com Contents onetary Policy Since the Global Financial Crisis 1 M Philip Arestis essons on Fiscal Policy After the Global Financial Crisis 41 L Malcolm Sawyer I nequality and the Need for Relevant Policies 85 Ahmad Seyf inancialisation and Distribution Before and After the Crisis: F Patterns for Six OECD Countries 127 Eckhard Hein, Petra Dünhaupt, Ayoze Alfageme, and Marta Kulesza I nvestment, Unemployment and the Cyber Revolution 173 Michelle Baddeley ack to the Future? UK Industrial Policy After the B Great Financial Crisis 221 David Bailey and Philip R Tomlinson vii viii Contents he Global Financial Crisis and the Labour Markets in T Europe: Do Labour Institutions Matter? 265 Jesús Ferreiro and Carmen Gómez he Tightening Links Between Financial Systems T and the Low-Carbon Transition 313 Emanuele Campiglio, Antoine Godin, Eric Kemp-Benedict, and Sini Matikainen Index 357 www.ebook3000.com Notes on Authors Ayoze Alfageme holds a bachelor’s degree in economics and a postgraduate degree in philosophical and political analysis of capitalism both from the University of Barcelona He is a second-year MA student in international economics at the Berlin School of Economics and Law His research interests are in the field of classical and post-Keynesian macroeconomics, distribution issues, political economy and European economic policies Philip Arestis is Professor and University Director of Research, Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK; Professor of Economics, Department of Applied Economics V, Universidad del País Vasco, Spain; Distinguished Adjunct Professor of Economics, Department of Economics, University of Utah, US; a research associate, Levy Economics Institute, New York, US; visiting professor, Leeds Business School, University of Leeds, UK; professorial research associate, Department of Finance and Management Studies, School of Oriental and African Studies (SOAS), University of London, UK. He was awarded the British Hispanic Foundation ‘Queen Victoria Eugenia’ Award (2009–2010); also awarded the ‘homage’ prize for his contribution to the spread of Keynesian Economics in Brazil by the Brazilian Keynesian Association (AKB), 15 August 2013 He served as Chief Academic Adviser to the UK ix 350 E Campiglio et al Bruvoll, A., Már Baldursson, F., Kralik, S., & Vennemo, H (2013) The financial crisis and fiscal consolidation in green budgets Copenhagen: Nordic Council of Ministers Burgess, S., Burrows, O., Godin, A., Kinsella, S., & Millard, S (2016) A dynamic model of financial balances for the United Kingdom (Staff Working Paper 614) London: Bank of England Caldecott, B., & McDaniels, J. (2014) Financial dynamics of the environment: Risks, impacts, and barriers to resilience Oxford: Smith School of Enterprise and the Environment Campiglio, E (2016) Beyond carbon pricing: The role of banking and monetary policy in financing the transition to a low-carbon economy Ecological Economics, 121, 220–230 Campiglio, E., Matikainen, S., & Zenghelis, D (2017) Climate-related risks and financial stability: The impact of quantitative easing London: Grantham Research Institute on Climate Change and the Environment Carbon Tracker (2013) Unburnable carbon 2013: Wasted capital and stranded assets London: Carbon Tracker Initiative and the Grantham Research Institute Carney, M (2015) Breaking the tragedy of the horizon–climate change and financial stability Speech given at Lloyd’s of London by the Governor of the Bank of England London: Bank of England CBI (2016) Bonds and climate change The state of the market in 2016 London: Climate Bonds Initiative CBRC (2012) Notice of the CBRC on issuing the green credit guidelines Beijing: China Banking Regulatory Commission CCST (2015) Trends in private sector climate finance New York: Climate Change Support Team (CCST) of the UN Secretary General Ceres (2014) Investing in the clean trillion: Closing the clean energy investment gap Boston: Ceres Cerutti, E., Claessens, S., & Laeven, L (2017) The use and effectiveness of macroprudential policies: New evidence Journal of Financial Stability, 28, 203–224 CISL (2014) Stability and sustainability in banking reform: Are environmental risks missing in Basel III? Cambridge: University of Cambridge Institute for Sustainability leadership Coady, D., Parry, I. W., Sears, L., & Shang, B (2015) How large are global energy subsidies? (IMF Working Paper WP/15/105) Washington, DC: International Monetary Fund Cohen, B. H (2013, September) How have banks adjusted to higher capital requirements? BIS Quarterly Review, 25–41 Basel The Tightening Links Between Financial Systems 351 CPI (2015) Global landscape of climate finance 2015 Venice: Climate Policy Initiative Critchlow, K (2015) Irrational Apathy: Investigating behavioural economic explanations for the carbon bubble Mimeo London School of Economics and Political Science Dafermos, Y., Nikolaidi, M., & Galanis, G (2017) A stock-flow-fund ecological macroeconomic model Ecological Economics, 131, 191–207 Dietz, S., Bowen, A., Dixon, C., & Gradwell, P (2016) “Climate value at risk” of global financial assets Nature Climate Change, 6, 676–679 EBA (2016) EBA report on SMEs and SME supporting factor EBA/OP/2016/14 London: European Banking Authority ECB (2016a) Decision (EU) 2016/948 of the European Central Bank of June 2016 on the implementation of the corporate sector purchase Programme (ECB/2016/16) Vienna: European Central Bank ECB (2016b) Economic Bulletin 3/2016 Frankfurt: European Central Bank ECB (2017) The Euro Area Bank lending survey – fourth quarter of 2016 Frankfurt: European Central Bank Elliott, D. J., Feldberg, G., & Lehnert, A (2013) The history of cyclical macroprudential policy in the United States Washington, DC: Board of Governors of the Federal Reserve System ESRB (2016) Too late, too sudden – transition to a low-carbon economy and systemic risk Frankfurt: European Systemic Risk Board EU (2012) Treaty on stability, coordination and governance in the economic and monetary union Brussels: European Union EU Parliament (2015) Monetary dialogue with Mario Draghi, president of the European Central Bank Brussels: Committee on Economic and Monetary Affairs Eurosif (2016) European SRI study 2016 Brussels: Eurosif Fama, E. F (1970) Efficient capital markets: A review of theory and empirical work The Journal of Finance, 25(2), 383–417 Farmer, J. D., Hepburn, C., Mealy, P., & Teytelboym, A (2015) A third wave in the economics of climate change Environmental and Resource Economics, 62(2), 329–357 Fawley, B. W., & Neely, C. J (2013) Four stories of quantitative easing Federal Reserve Bank of St Louis Review, 95(1), 51–88 Frisari, G., Hervè-Mignucci, M., Micale, V., & Mazza, F (2013) Risk gaps: A map of risk mitigation instruments for clean investments Venice: Climate Policy Initiative FSB (2016) 2016 List of global systemically important Banks (G -SIBs) Basel: Financial Stability Board www.ebook3000.com 352 E Campiglio et al FS-UNEP and BNEF (2016) Global trends in renewable energy investment 2016 Frankfurt: Frankfurt School-UNEP Centre and Bloomberg New Energy Finance FT (2015) FT Global 500 London: Financial Times Geels, F. W (2013) The impact of the financial–economic crisis on sustainability transitions: Financial investment, governance and public discourse Environmental Innovation and Societal Transitions, 6, 67–95 GFSG (2016) G20 green finance synthesis report Geneva: Green Finance Study Group GIIN (2016) Impact investing trends: Evidence of a growing industry New York: Global Impact Investing Network GNDG (2008) A green new deal London: Green New Deal Group Gobat, J., Yanase, M., & Maloney, J. F (2014) The net stable funding ratio: Impact and issues for consideration (IMF Working Paper WP/14/106) Washington, DC: International Monetary Fund Godin, A., Campiglio, E., Dawkins, E., & Kemp-Benedict, E (2017) Climate financial bubbles: How market sentiments shape the transition to low-carbon capital Mimeo Golosov, M., Hassler, J., Krusell, P., & Tsyvinski, A (2014) Optimal taxes on fossil fuel in general equilibrium Econometrica, 82(1), 41–88 Goulder, L. H (1995) Environmental taxation and the “double dividend”: A reader’s guide In L. Bovenberg & S. Cnossen (Eds.), Public economics and the environment in an imperfect world Netherlands: Springer Gray, S (2011) Central Bank balances and reserve requirements (IMF Working Paper WP/11/36) Washington, DC: International Monetary Fund Hirshleifer, D (2001) Investor psychology and asset pricing The Journal of Finance, 56(4), 1533–1597 Humphrey, C (2015) Challenges and opportunities for multilateral development banks in 21st century infrastructure finance Seoul/Washington, DC: Global Green Growth Institute and The Intergovernmental Group of Twenty Four on Monetary Affairs and Development IEA (2015a) Energy technology perspectives 2015 Paris: International Energy Agency IEA (2015b) World energy outlook 2015 Paris: International Energy Agency IEA (2016) Key world energy statistics 2016 Paris: International Energy Agency IMF (2013) Unconventional monetary policies—Recent experience and prospects Washington, DC: International Monetary Fund IPCC (2014a) Climate change 2014: Impacts, adaptation and vulnerability Working Group II – Intergovernmental Panel on Climate Change The Tightening Links Between Financial Systems 353 IPCC (2014b) Climate change 2014: Mitigation of climate change Working Group III – Intergovernmental Panel on Climate Change IPCC (2014c) Climate change 2014 Synthesis Report Geneva: Intergovernmental Panel on Climate Change Jacobs, M (2012) Green growth: Economic theory and political discourse (Working Paper 92) London: Grantham Research Institute on Climate Change and the Environment Kahneman, D., & Tversky, A (1979) Prospect theory: An analysis of decision under risk Econometrica, 47(2), 263–291 Krishnamurthy, A., & Vissing-Jorgensen, A (2011) The effects of quantitative easing on interest rates: Channels and implications for policy (Working Paper 17555) Cambridge, MA: National Bureau of Economic Research Lander, E (2011) The green economy: The wolf in Sheep’s clothing Amsterdam: Transnational Institute Lane, T (2017) Thermometer rising – climate change and Canada’s economic future Remarks by the Deputy Governor of the Bank of Canada March 2017 Montreal: Bank of Canada Lazard (2016) Lazard’s levelized cost of energy analysis Hamilton: Lazard Liebreich, M., & McCrone, A (2013) Financial regulation – Biased against clean energy and green infrastructure? White paper Bloomberg New Energy Finance Lim, C., Columba, F., Costa, A., Kongsamut, P., Otani, A., Saiyid, M., Wezel, T., & Wu, X (2011) Macroprudential policy: What instruments and how to use them? Lessons from country experiences (IMF Working Paper WP/11/238) Washington, DC: International Monetary Fund Ma, G., Yan, X., & Liu, X (2013) China’s evolving reserve requirements Journal of Chinese Economic and Business Studies, 11(2), 117–137 Mazzucato, M., & Semieniuk, G (2016) Financing renewable energy: Who is financing what and why it matters (SPRU Working Paper Series 12) Falmer: Science Policy Research Unit, University of Sussex McGlade, C., & Ekins, P (2015) The geographical distribution of fossil fuels unused when limiting global warming to 2 °C Nature, 517(7533), 187–190 McLeay, M., Radia, A., & Thomas, R (2014) Money creation in the modern economy In Quarterly Bulletin Q1 London: Bank of England Meinshausen, M., Meinshausen, N., Hare, W., Raper, S. C B., Frieler, K., Knutti, R., Frame, D. J., & Allen, M. R (2009) Greenhouse-gas emission targets for limiting global warming to 2°C Nature, 458(7242), 1158–1162 Murphy, R., & Hines, C (2010) Green quantitative easing: Paying for the economy we need Norfolk: Finance for the Future www.ebook3000.com 354 E Campiglio et al Narbel, P. A (2013) The likely impact of Basel III on a Bank’s appetite for renewable energy financing (Discussion paper 10/2013) Norwegian School of Economics Nassr, I. K., Wehinger, G., & Yokoi-Arai, M (2016) Financial risks in the low-growth, low-interest rate environment OECD Journal: Financial Market Trends, 2015(2), 63–90 NCE (2014) Better growth, better climate – Synthesis Report Washington, DC: The New Climate Economy Nelson, D., & Shrimali, G (2014) Finance mechanisms for lowering the cost of renewable energy in rapidly developing countries Venice: Climate Policy Initiative New York Fed (2010) FAQs: MBS purchase program, Federal Reserve Bank of New York Available at: https://www.newyorkfed.org/markets/mbs_faq.html Accessed 24 Mar 2017 Nyborg, K. G (2017) Collateral frameworks: The open secret of central banks Cambridge: Cambridge University Press OECD (2011) Towards green growth Paris: Organisation for Economic Co-operation and Development OECD (2013) Putting green growth at the heart of development Paris: Organisation for Economic Co-operation and Development OECD (2015) Towards green growth? Tracking progress Paris: Organisation for Economic Co-operation and Development Olbrisch, S., Haites, E., Savage, M., Dadhich, P., & Shrivastava, M. K (2011) Estimates of incremental investment for and cost of mitigation measures in developing countries Climate Policy, 11(3), 970–986 PBC (2013) China monetary policy report – quarter three Beijing: Monetary Policy Analysis Group of the People’s Bank of China PWMSP (2011) Country report lebanon – Benchmarking of existing practice against EU Norms Beirut: Paving the Way for the Mediterranean Solar Plan Rogers, J. (2014) FRB: Evaluating asset-market effects of unconventional monetary policy: A cross-country comparison Federal Reserve Board Available at: http://www.federalreserve.gov/pubs/ifdp/2014/1101/default.htm Accessed 25 Aug 2016 Romer, P (2016) The trouble with macroeconomics Commons Memorial Lecture of the Omicron Delta Epsilon Society, January 5, New York University Rozenberg, J., Hallegatte, S., Perrissin-Fabert, B., & Hourcade, J.-C (2013) Funding low-carbon investments in the absence of a carbon tax Climate Policy, 13(1), 134–141 The Tightening Links Between Financial Systems 355 Ryan-Collins, J., Greenham, T., Werner, R., & Jackson, A (2011) Where does money come from? (2nd ed.) London: New Economics Foundation Ryan-Collins, J., Werner, R., Greenham, T., & Bernardo, G (2013) Strategic quantitative easing: Stimulating investment to rebalance the economy London: New Economics Foundation S&P Global (2016) Annual global project finance default and recovery study, 1980–2014 New York: S&P Global Market Intelligence Samuelson, W., & Zeckhauser, R (1988) Status quo bias in decision making Journal of Risk and Uncertainty, 1(1), 7–59 Schmidt, T. S (2014) Low-carbon investment risks and de-risking Nature Climate Change, 4(4), 237–239 Schotten, G., van Ewijk, S., Regelink, M., Dicou, D., & Kakes, J. (2016) Time for transition-an exploratory study of the transition to a carbon-neutral economy (Occasional Studies 14–2) Netherlands: Netherlands Central Bank Scruggs, L., & Benegal, S (2012) Declining public concern about climate change: Can we blame the great recession? Global Environmental Change, 22(2), 505–515 Shiller, R. J (2015) Irrational exuberance Princeton: Princeton University Press Signorini, L. F (2017) The financial system, environment and climate: A regulator’s perspective Welcome address by the deputy Governor of the Bank of Italy Rome: Bank of Italy Silver, N (2017) Blindness to risk: Why institutional investors ignore the risk of stranded assets Journal of Sustainable Finance & Investment, 7(1), 99–113 Simon, H. A (1959) Theories of decision-making in economics and behavioral science The American Economic Review, 49(3), 253–283 Sonnenschein, J., & Mundaca, L (2016) Decarbonization under green growth strategies? The case of South Korea Journal of Cleaner Production, 123, 180–193 Spencer, T., & Stevenson, J. (2013) EU low-carbon investment and new financial sector regulation: What impacts and what policy response? (Working Paper 05/2013) Paris: IDDRI Teulings, C., & Baldwin, R (2014) Secular stagnation: Facts, causes, and cures VoxEU eBook London: Centre for Economic Policy Research Thomä, J., & Chenet, H (2017) Transition risks and market failure: A theoretical discourse on why financial models and economic agents may misprice risk related to the transition to a low-carbon economy Journal of Sustainable Finance & Investment, 7(1), 82–98 www.ebook3000.com 356 E Campiglio et al Tienhaara, K (2014) Varieties of green capitalism: Economy and environment in the wake of the global financial crisis Environmental Politics, 23(2), 187–204 Turrell, A (2016) Agent-based models: Understanding the economy from the bottom up Bank of England Quarterly Bulletin 2016Q4 London: Bank of England UNEP (2009) Global green new deal Geneva: United Nations Environment Programme UNEP (2011) Towards a green economy: Pathways to sustainable development and poverty eradication Nairobi: United Nations Environment Programme UNFCCC (2016) Report of the conference of the parties on its twenty-first session, held in Paris from 30 November to 13 December 2015 Addendum Part Two: Action taken by the conference of the parties at its twenty-first session FCCC/CP/2015/10/Add.1 Paris: United Nations Framework Convention on Climate Change Villeroy de Galhau, F (2015) Climate change: The financial sector and pathways to 2°C Speech by the Governor of the Banque de France Paris: Banque de France Ward, J. 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Greening China’s financial system Winnipeg: International Institute for Sustainable Development Index1 A asset price bubble pressures, 20 austerity, 55, 61, 64, 81, 92, 93, 95, 100, 110, 114, 116, 119, 129, 153, 153n10, 252, 318, 335, 336 austerity strategies, 336 automatic stabilisers, 4, 42, 49, 50, 52, 53, 80, 81 B Bank for International Settlements, 28 Bank of England, 8, 13n12, 17n15, 30, 105, 211, 255, 325, 333, 334, 344, 348 bargaining power, 75, 138, 141, 142, 144–57, 159–63, 165–8 Basel III, 28n29, 30, 31, 330–2, 346 Brazil, 91, 222 Brexit, 210, 224, 235, 248–55, 250n12 budget deficit, 42, 44–52, 51n3, 54–60, 63–6, 70, 72, 73, 80, 81 C cap-and-trade system of emissions allowances, 322 capital income, 89, 111, 135 carbon tax, 323, 336, 337 Catapult Centres, 231–5 central bank rate of interest, central banks, 3, 4, 6–8, 7n4, 15, 15n13, 17–19, 17n16, 19n20, 22, 23, 26n28, 32–4, 44, 212, 213, 315, 325, 332, 333, 339–42, 344, 346 Note: Page numbers followed by “n” refer to notes 1 © The Author(s) 2017 P Arestis, M Sawyer (eds.), Economic Policies since the Global Financial Crisis, International Papers in Political Economy, DOI 10.1007/978-3-319-60459-6 www.ebook3000.com 357 358 Index China, 15n13, 91, 98, 99, 222, 328, 340, 342n9, 345 climate financial risks, 325 climate-aligned financial regulation, 338–41 climate-related risks, 324, 338, 340, 348 comparative advantage, 96, 97, 228, 232, 236, 242 competitive advantage, 97, 238, 246 computing investment, 175–80, 190, 192, 193, 195–7, 200, 201, 203, 205, 209, 210, 214 Cyber Revolution, 173–215 cyclically adjusted budget position, 56, 72, 73 D debt, 13, 16–19, 19n18, 20n21, 22, 25n27, 29, 42, 45, 46, 48, 50, 53, 54, 57, 59–64, 70, 81, 89, 90, 95, 98, 106–8, 110, 114, 118, 120, 128, 129, 138, 142, 144, 146, 148, 153, 156, 157, 159, 160, 162, 163, 165, 167, 222, 317, 321, 322, 328, 330, 331, 333, 334, 340, 342 debt scare, 42 debt to GDP ratio, 45, 54, 64 deregulation and liberalisation of the labour market, 155 development banks, 317, 320, 321, 342–4, 342n9, 346 digital economy, 175, 180, 181, 183, 186, 187, 189, 190, 192, 199, 200, 202, 203, 209, 210, 212–15 digital technologies, 182, 184, 190, 192, 201, 209–12, 214 discretionary fiscal policy, 52 Dodd-Frank Act, 30 domestic demand-led economy, 129, 165 double dividend, 337 Dynamic Stochastic General Equilibrium (DSGE) models, 6n4, 7, 28, 347, 348 E economic crisis, 143n6, 147n7, 150n8, 153n12, 158n14, 161n15, 277, 286, 306, 307, 330, 338 Efficient Market Hypothesis, 325 employment, 24, 44, 70, 78, 80, 96, 108, 113, 141, 142, 144, 146, 148, 149, 153, 155, 157, 160, 163, 168, 177, 178, 183, 186, 200, 202, 203, 208–10, 212–14, 225, 255, 267–73, 273n3, 275, 277–94, 291n5, 291n6, 292n9, 292n10, 293n11, 296–8, 300–8, 300n14, 304n15, 327, 328, 346 environmental policy, 335 employment protection, 142, 144, 146, 148, 149, 153, 155, 157, 160, 163, 178, 291n6, 293, 296–8, 300, 303, 305, 308 equivalised income, 133, 134 EU Emissions Trading Scheme, 322 European Central Bank, 273, 333 European Union, 222, 266, 271–305, 322 Index expansionary fiscal consolidation, 46, 57, 65, 68, 70, 71 359 287, 291, 292, 291n6, 294, 295, 297, 298, 300n14, 325, 343 free market, 94, 95, 100 F FDI (See foreign direct investment (FDI)) federal funds rate, 9, 23n24 financial assets, 5, 13, 17n15, 18, 59, 62, 89, 90, 93, 314, 324, 325, 327, 333, 341 financial capital, 95, 112, 187 financial constraints, 188 financial investment, 142, 145, 148, 149, 152, 156, 159, 162, 197, 345 financial liberalisation, 141 financial overheads, 143, 146–52, 154, 156–8, 160–3, 165–7 financial stability, 2, 3, 5n3, 10–12, 23–33, 315, 325, 338, 340, 341, 346 financial system., 25, 30n30, 247, 314, 318, 345 financial technology (FinTech), 174 financialisation, 127–68 fine tuning, 44 fiscal policy, 3, 4, 17, 17n16, 19, 24, 29, 34, 41–81, 120, 255 fiscal stabilization, 43 food banks, 92 food stamps programme, 92 foreign direct investment (FDI), 93, 114, 116, 156, 223, 227, 249 fossil-dependent companies, 314 France, 57, 112, 129, 131–4, 161–8, 161n15, 190, 216, 225, 230, 272, 275, 277, 278, 281–4, G GDP (See gross domestic product (GDP)) Germany, 21, 21n22, 57, 99, 129, 131–4, 153–8, 153n12, 165–8, 216, 222, 230, 232, 271, 272, 274–8, 281, 282, 284, 287, 290, 291, 292n10, 294, 295, 297, 298, 299n13, 328, 328n7, 329, 343 GFC (See Global Financial Crisis (GFC)) Gilded Age, 92 Gini coefficients, 93, 129, 130, 133, 143, 145, 147, 149, 150, 152, 153, 156, 158, 160, 161, 163–6, 168 Global Financial Crisis (GFC), 2, 3, 6–24, 10n8, 17n15, 17n16, 26, 28–34, 42n1, 43, 45, 180, 222–4, 228, 231, 236, 245, 246, 249, 254, 266, 267, 269, 271, 272, 274, 280, 287, 288, 290, 300, 306–8, 315, 327–35, 338, 341, 346, 348 globalisation, 93, 96, 97, 108, 116, 139, 141, 144, 186, 211, 249 Global Landscape of Climate Finance, 318 Great Financial Crisis, 175 great moderation, 43 www.ebook3000.com 360 Index Great Recession, 2, 34, 87, 91, 97, 112, 130, 149, 150, 154, 155n13, 167, 222, 266 green growth, 315, 335, 336, 346 green investment, 317, 320, 322, 323, 338, 341, 346 Green New Deal, 327 Green Quantitative Easing, 315 gross domestic product (GDP), 11, 13, 13n12, 20, 22, 42, 45, 47–52, 54–8, 60–4, 70, 72, 76, 77, 116, 117, 130, 130n1, 131, 142, 144, 153, 155, 157, 159, 160, 162, 163, 177, 179–81, 181n2, 188, 189, 195, 215, 224, 230, 252, 266–8, 273, 275, 277–89, 307, 328, 336 growth, 2n2, 6, 10n8, 16–23, 25n27, 34, 42, 46, 49, 52, 55, 60–4, 70, 71, 75, 77, 78, 81, 86, 87, 90, 91, 93, 98, 100, 108, 112, 113, 120, 129, 138, 142, 155, 168, 176–82, 186, 187, 189, 190, 192, 195, 197, 200–11, 213, 216, 223, 225, 227, 228, 232, 235, 236, 243n9, 247, 251–5, 266, 268, 269, 272, 277, 278, 280, 282–5, 287–9, 291n5, 293, 308, 315, 328, 333, 334, 336, 338, 340, 346 H Hartz-laws, 155 high-technology industries, 177 high-carbon lock-in, 342 horizontal industrial policies, 223 housing assets, 89, 187 I ICT (See information and communication technologies (ICT)) Illicit financial outflows, 113–16 imperfect capital markets, income distribution, 94, 106, 107, 111, 128, 130, 133, 135, 135n3, 137, 138, 140n5, 145, 147, 160, 161, 164, 167, 168 income inequality, 87, 88, 130, 134, 149, 161, 164, 293 industrial policy, 222–8, 226n2, 236, 240–2, 243n9, 244, 248, 251, 254, 255 industrial strategy, 222, 224, 228, 243, 250–4 inequality, 55, 86–96, 105, 110, 112, 113, 120, 134, 135, 145, 146, 148, 158, 168, 185, 189, 190, 203, 210, 292 inflation, 3, 4, 5n3, 6, 11, 13, 16–19, 17n16, 22, 24n24, 34, 43, 50, 64, 74, 75, 78, 87, 107, 155, 211, 213, 333, 334 inflation target (IT), 3–7, 11, 13, 16, 19, 28, 33, 34, 43, 211, 213 information and communication technologies (ICT), 178, 184, 203, 205–9, 214, 216, 228 institutional investors, 317 intangible investments, 179, 191, 205 Index interest rates, 4, 11, 12, 15–26, 15n13, 18n17, 19n20, 21n22, 24n24, 29, 33, 34, 43, 44, 54, 69, 81, 106, 138, 139, 156, 159, 212, 332, 333, 341 International Monetary Fund, 28, 226, 266 Internet technologies, 174, 182, 190 investment, 8, 10n8, 15, 16, 21, 30, 31, 43, 45, 46, 56, 64, 66–8, 70–2, 78, 80, 81, 99, 103, 104, 108–10, 113, 118, 120, 129, 138, 139, 148, 149, 152, 156, 159, 175, 177–81, 187, 188, 190–210, 214–16, 224, 225, 227, 229, 229n4, 230, 232–5, 245–7, 249–52, 254, 255, 292, 314, 314n2, 316–23, 326–9, 331, 334, 337, 338, 341, 342 361 liquidity constrained, liquidity regulation, 330 Lisbon strategy (2000), 228 Local Economic Partnerships (LEPs), 239, 240, 243, 244n10, 245, 246 Long-Term Refinancing Operation, 13 long-term unemployment, 175, 185, 203, 205–8, 210, 213–15 low-carbon finance, 316–23 low-carbon investment, 315–17, 326, 338, 346 low-carbon projects, 331, 332, 342–4 low-carbon transition, 314–16, 320, 324, 325, 327–9, 334, 337, 346, 347 M K Kaleckian theory, 130, 135, 167 L labour market institutions, 159, 269, 270, 277, 289 labour market performances, 273, 280, 303, 307, 308 labour market rigidities, 270 labour productivity, 99, 111, 183, 189 labour segmentation, 297 LEPs (See Local Economic Partnerships (LEPs)) Liikanen Report, 30 macroprudential policies., 27 macroprudential regulation, 27, 315, 327, 330, 335, 338 management salaries, 128, 132, 135, 136, 138, 139, 141, 143 manufacturing employment, 96 market failure, 229, 237, 254, 322, 323, 336 mark-up pricing, 138 microprudential policies, microprudential regulation, 330 monetary policy, 1–7, 17n15, 18, 19, 23, 24, 26–8, 33, 43, 44, 49, 66, 70, 176, 211–13, 255, 270, 315, 344 Moore’s Law, 176, 202, 204 multiplier, 42, 65–71, 81, 90, 212 www.ebook3000.com 362 Index N negative interest rates, 2, 3, 13, 15, 17n15, 18–24, 18n17, 19n20, 29, 33 neo-liberalism, 135, 139–41, 144 network effects, 178, 192 New Consensus Macroeconomics (NCM), 3, 5, 6, 6n5 non-accelerating inflation rate of unemployment, 75 O one per cent income share, 112 P permanent employment contracts., 297 policy coordination, 228 potential output, 4, 42, 48, 51, 52, 56, 72–8, 80, 81 profit shares, 129, 135, 137, 140, 141, 143, 147, 160, 165, 167 progressive tax system, 44 public debt, 45, 50, 53, 54, 60–4, 81, 110 Q Quantitative Easing (QE), 2, 9–11, 13–18, 13n12, 15n13, 19n18, 21, 26, 29, 33, 315, 332–5, 341–6 R rational expectations, 3, regional policy, 224, 227, 236, 238, 241–3 Reinhart, C. M., 60–2 renewable capital, 318 renewable energy projects, 316, 321, 331, 332, 342, 346 rent deflation, 109 rent extraction., 102, 119 rentier capitalism, 105, 108, 110, 120 rentiers, 95, 102, 103, 105, 109, 110, 141–54, 156–8, 160–3, 165–7 rentiers’ profit claims, 142, 143, 145–52, 154, 156–63, 165–8 rent-seeking, 105, 226 repo (repurchase) operations, reserve ratio requirements, 338 Ricardian equivalence, 44 Rogoff, K. S., 60–2 S sectoral policies, 224, 245–8 secular stagnation, 128, 175, 207, 214 shareholder value orientation, 139, 142, 144–6, 148, 151, 153, 156, 157, 159, 161–4, 166 small and medium sized enterprises (SME), 229, 235, 247, 341, 344 smart specialisation, 224, 231, 236–41, 243, 245, 250, 253 SME (See small and medium sized enterprises (SME)) Spain, 56, 57, 77, 78, 129, 131–4, 150–3, 150n8, 153n10, Index 164–7, 216, 271, 274–8, 281, 282, 285, 290–5, 291n6, 297, 298, 328, 329 specialisation, 236, 237, 239, 240 Stability and Growth Pact, 45, 54 sticky prices and wages, stress tests, 14 structural budgets, 48, 52 subprime crisis, sustainable development, 346 sustainable economy., 314, 335, 342 Sweden, 93n2, 129, 131–4, 158–61, 158n14, 165–8, 216, 272, 275, 277, 278, 282, 286, 287, 290–2, 291n6, 294, 295, 297, 298 T TARP, tax avoidance, 116, 117, 120 tax evasion, 116, 117, 119, 120 technological change, 174, 176, 179, 190–2, 196, 197, 200, 214 technology and innovation policy., 228 temporary agency workers, 289, 292, 294, 296 TLTROs, 344 top income shares, 130, 132, 143, 145, 147, 149, 150, 152, 153, 158, 160, 161, 163–6, 168 trade unions, 137, 138, 141, 142, 144–6, 149, 150, 152–7, 159–63, 165, 167, 168 transmission mechanism, 4–7, 49, 211, 212 transversality condition, Troubled Asset Relief Programme, 363 U UK, 8, 10, 11, 11n9, 14, 17n15, 21n22, 30–2, 45–7, 55, 55n5, 57, 71, 88, 91, 92, 93n2, 96, 99, 100, 103, 106, 111–13, 115, 129–33, 147–50, 147n7, 164–7, 177, 180, 183, 189, 190, 203, 208, 210, 211, 213, 216, 222–35, 229n4, 237, 239, 242, 245–55, 249n11, 333 uncertainty, 6, 16, 21, 23, 71, 191, 196, 197, 200, 202, 228, 229, 237, 247, 250, 255, 321, 323, 327 unconventional monetary policies, 17n15, 18, 346 unemployment, 22, 24n24, 42, 48, 53, 55, 65, 70, 75, 78, 80, 97, 142, 144, 146, 148, 149, 151–3, 155, 157, 160, 163, 175, 177, 183–5, 190, 201, 203, 205–10, 214–16, 267–89, 273n3, 291n6, 292, 293, 298–303, 299n13, 305–8 unorthodox monetary policy instruments, 7, 15–24 US Federal Reserve System (the Fed), USA, 45, 47, 49, 51, 55, 57–9, 62, 87, 89, 90, 92, 93, 93n2, 95–9, 105–7, 111, 113, 118, 128, 129, 131–4, 143–7, 143n6, 150, 164–7, 179, 180, 188, 189, 216, 222, 227, 230, 232, 249, 249n11, 266–8 www.ebook3000.com 364 Index V Y vertical industrial policies, 223 Vickers Report, 30, 31 yieldco model, 322 Z W wage share, 130, 131, 130n1, 135, 137, 141, 143–54, 156–68 wealth inequality, 17n15, 108 zero interest rates, 16 ... by the Department of Land Economy, University of Cambridge, under the aegis of the Cambridge Trust for New Thinking in Economics, entitled Economic Policies Since the Global Financial Crisis The. .. 295 301 Monetary Policy Since the Global Financial Crisis Philip Arestis Abstract This chapter focuses on monetary policy since the Global Financial Crisis (GFC), and the subsequent ‘Great Recession’... Sawyer 2004b, 2008) validates the NCM theoretical propositions Monetary Policy Since the Global Financial Crisis Despite all these problems with the NCM and its economic policy, support for