Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162136
Authors: 
Schnabl, Gunther
Year of Publication: 
2017
Series/Report no.: 
Working Paper, Universität Leipzig, Faculty of Economics and Management Science 148
Abstract: 
The paper analyses the role of monetary policy for cyclical movements of investment and asset markets in East Asia and Europe based on a Mises-Hayek overinvestment framework. It is shown how the gradual global decline of interest rates has triggered wandering overinvestment cycles in Japan, Southeast Asia and China. Similarly, it is shown how a one-size monetary policy within the European Monetary Union has not preserved the European Monetary Union from idiosyncratic economic development and crisis because of uncoordinated fiscal policies. With monetary policy crisis management being argued to impede financial and economic restructuring, a timely exit from ultra-expansionary monetary policies is recommended for both East Asia and Europe to reconstitute economic stability and growth.
Subjects: 
Hayek
Mises
East Asia
European Monetary Union
monetary overinvestment theory
fiscal policy
asymmetric shocks
secular stagnation
JEL: 
E52
E58
F42
E63
Document Type: 
Working Paper

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