Az európai gazdasági kormányzás előtt álló kihívások. A hármas tagadás lehetetlensége (Challenges of European economic governance. The impossible trinity of denial.)

Az európai gazdasági integráció folyamata olyan kényszerhelyzetekben formálódott a múltban, amelyek a közgazdaságtudományban jól ismert lehetetlen háromság alapján is leírhatók. Az Európai Monetáris Rendszer a rögzített árfolyam-mechanizmusra és önálló jegybanki politikára épített, korlátozva a tőkemozgásokat. A Gazdasági és Monetáris Unió ugyanakkor a tőke szabad áramlásával és az árfolyamok visszavonhatatlan rögzítésével felszámolta a tagállami szintű jegybanki autonómiát. Az euróövezet működése egyszersmind arra a háromszoros tagadásra épül(t), hogy 1. nem lehetséges az euróövezetből való kilépés, 2. nem engedélyezett a kimentés és 3. nem kerülhet sor államcsődre. A 2008-ban Európát is elérő pénzügyi és gazdasági válság azonban elemi erővel mutatott rá e hármas tiltás tarthatatlanságára. A gazdasági kormányzás körül kibontakozott viták így jól közelíthetők a három tiltó szabály egyidejű érvényesülése lehetetlenségének bemutatásával, számba véve az egyes opciók költségeit és lehetséges hasznait. / === / The process of economic integration in the EU has been shaped by the well-known theorem of the impossible trinity. Accordingly, the European Monetary System was built upon a mix of a fixed exchange-rate regime and an autonomous monetary policy, thereby constraining capital mobility. In launching the EMU project, the EU countries decided to fix national currencies irrevocably and maintain full capital mobility, in exchange for delegating their monetary policy upwards to a supranational level. The introduction of the Euro zone, however, has simultaneously meant denial of the following three elements: (1) exit, (2) bail-out, and (3) default. Nevertheless, the 2008–9 financial and economic crisis has demonstrated mercilessly that these three pillars are incompatible with each other. So the current debates on reshaping economic governance in the EU can be modelled by introducing the “impossible trinity of denial”, concentrating on the benefits and the costs of each option.

Megmenthető-e az euróövezet? (Can the eurozone be saved?)

Az euró válságának szélesebb globális összefüggései vannak, mind a kiváltó okait, mind a nemzetközi pénzügyi rendszer működésének hiányosságait illetően. Az európai monetáris integráció szilárd reálgazdasági alapokon nyugszik. Az euró teljesítménye mind az árstabilitás, mind az árfolyamok ingadozása tekintetében megfelelőnek tekinthető. Az euróválság szuverénadósság-válság, és leginkább a zóna egyes (déli) országait érinti. Az euróválság okai többrétűek: ezek között az eurózóna hibás konstrukcióját, téves koncepcionális feltételezéseit, a politikai kompromisszumokkal folyamatosan megnyomorított működését említhetjük leginkább. A közös pénz önmagában nem oka a válságnak és nem is bűvös ellenszer. A hibás gazdaságpolitikáért belül ugyanúgy bűnhődni kell, mint kívül. Görögország, vagy Írország elsősorban nem azért került válságba, mert tagjai az eurózónának, hanem mert hibás gazdaságpolitikát folytattak. Nem zárható ki az eurózóna szétesése, de kicsi az esélye. / === / The euro crisis has broad global connections, both in terms of deficiencies of the international monetary system, and of the crisis of the global financial markets. The European monetary integration is based on strong real-economic foundations. The performance of the euro has been satisfactory both in terms of price and exchange rate stability. The present crisis is a sovereign debt crisis, and it is concentrated mainly on some Southern members. The causes of the crisis are manifold: wrong institutional and policy structures, mistaken conceptual assumptions, and the distortion of its operation by continuous political compromises. The contradictions between common monetary policy and the national fiscal policies, the failure of disciplining role of the markets, the weakness of control of national fiscal policies, the dangers of "one size fits all" monetary policy, the failure of finding the proper national policy mixes, particularly in terms of income and structural policies, and the underestimation of social and cultural differences, can be particularly stressed. The common monetary policy failed to secure the necessary equilibrium among liquidity, stability and growth. Greece and Ireland got in crisis not because they are members of the euro zone, but because of their mistaken economic policies. The collapse of the euro zone cannot be excluded, but the chances of it are limited.

Kiigazítás recesszió nélkül. Esettanulmány a magyar stabilizációról = Adjustment without recession: A Case Study of Hungarian Stabilization

1995. március 12-én a magyar kormány és a központi bank szigorú kiigazítási és stabilizációs programot hirdetett meg. A cikk az első eredmények számbavételére tesz kísérletet. A program meghirdetése előtt Magyarország két egymást követő év- ben hatalmas fizetésimérleg-hiányt mutatott fel, és nemzetközi megítélése romlani kezdett. A program radikális intézkedései nyomán elkerülhetővé vált a mexikói vál- sághoz hasonló pénzügyi katasztrófa. Sok makrogazdasági mutató jól érzékelhető javulást jelez: lényegesen csökkent a kereskedelmi mérleg és a folyó fizetési mérleg hiánya, a költségvetés elsődleges egyenlege pozitív lett. Az ilyesféle stabilizációs programokat rendszerint súlyos visszaesés és a munkanélküliség nagy növekedése kíséri. Magyarország elkerülte ezeket a mellékhatásokat: a GDP drasztikus vissza- esés helyett valamelyest tovább növekedett, és a munkanélküliség változatlan ma- radt. A javulásnak nagy ára volt: az életszínvonal erőteljes csökkenése, az infláció felgyorsulása, bár a magyarországi infláció még mindig a kézben tartott, mérsékelt infláció sávjában maradt. A cikk ismerteti a program heterodox módszereit: 1. nagy leértékelés, az előre meghirdetett csúszó árfolyam rezsimjének bevezetése, valamint ideiglenes import- vámpótlék kivetése; 2. határozott jövedelempolitika, amely 12 százalékos reálbércsök- kenést kényszerített ki; 3. fiskális intézkedések, köztük jóléti jogosultságok csök- kentése (a program meghirdetése előtt ezek a jogosultságok tabuk voltak); 4. a hitel- kínálat átcsoportosítása a vállalati szektor javára, a jövedelmezőség növekedése; 5. feszített (bár nem mértéktelenül feszített) monetáris politika, amely lehetővé tette a sikeres vállalatok expanzióját; 6. a privatizáció felgyorsítása, nagy és sikeres lépé- sek egyes kulcsszektorok (energia, telekommunikáció) privatizációjában. Végezetül a tanulmány óva int a túlzott magabiztosságtól és felhívja a figyelmet a potenciális veszélyekre. A makrogazdasági javulás még törékeny. A magyar fejlődés legbiztatóbb sajátossága a termelékenység erőteljes és folyamatos növekedése. / === / On March 12, 1995 Hungary s government and central bank announced a tough program of adjustment and stabilization. This study is an attempt to asses the first results. Before the announcement of the program Hungary had a huge current account deficit for two consecutive years, and her international reputation started to decline. The program s radical measures made it possible to avoid a Mexico-style financial catastrophe. Many macroeconomic indicators show tangible improvement: the trade deficit and the deficit on the current account have been reduced significantly, the primary budget shifted to surplus. These kinds of adjustment programs are usually associated with deep recession and a large increase of unemployment. Hungary avoided these adverse side-effects: GDP instead of a drastic decline, continued to grow somewhat, and unemployment remained unchanged. There was a high price for the improvement: a sharp decline in the standard of living, and an acceleration of inflation, although Hungary is still in the range of controlled, moderate inflation. The paper describes the heterodox instruments of the program: (1) large devaluation, followed by a new exchange rate regime of pre-announced crawling peg, and a temporary import surcharge, (2) energetic income policy, enforcing a 12% cut in real wages; (3) fiscal measures, including cuts in welfare entitlements. That happened for the first time: before the program entitlements had been regarded as taboo ; (4) reallocation of credit supply in favor of the enterprise sector; increase of profitability; (5) tight (but not excessively tight) monetary policy, allowing the expansion of successful private busi- ness; (6) acceleration of privatisation, including large and successful steps in the privatisation of some key sectors (energy, telecommunication). Finally the paper warns against excessive self- confidence and draws the attention to potential dangers. The macroeconomic improvement is still fragile. The most reassuring feature of Hungary s development is the impressive and persistent improvement of productivity.

The factors affecting the international judgement of the Forint and Zloty in the light of the financial crisis of year 2008

The financial crisis of 2007-2009 has shaken both money and capital markets. Its consequences have not even left European markets untouched and divided spirits in the financial world. In some countries efforts by the monetary policy to protect the national currency throughout the crisis seemed to be ineffective. In the present paper we are investigating the effect of the most important macroeconomic and economic policy factors on the exchange rate of the forint and zloty in the last decade. For an analysis of exchange rates we are relying on some preceding research results based on equilibrium exchange rate theories.

Kockázattal kiegészített Taylor-szabályok becslése Magyarországra = Estimation of risk-augmented Taylor rules for Hungary

Cikkünkben a magyar monetáris politikát vizsgáljuk olyan szempontból, hogy kamatdöntései meghozatalakor figyelembe vette-e az országkockázatot, és ha igen, hogyan. A kérdés megválaszolásához a monetáris politika elemzésének leggyakoribb eszközét használjuk: az ország monetáris politikáját leíró Taylor-szabályokat becslünk. A becslést több kockázati mérőszámmal is elvégeztük több, különféle Taylor-szabályt használva. Az érzékenységvizsgálatban az inflációhoz és a kibocsátási réshez is alkalmaztunk más, az alapspecifikációban szereplőtől eltérő mérőszámokat. Eredményeink szerint a Magyar Nemzeti Bank kamatdöntései jól leírhatók egy rugalmas, inflációs célkövető rezsimmel: a Taylor-szabályban szignifikáns szerepe van az inflációs céltól való eltérésének és - a szabályok egy része esetén - a kibocsátási résnek. Emellett a döntéshozók figyelembe vették az országkockázatot is, annak növekedésére a kamat emelésével válaszoltak. Az országkockázat Taylor-szabályba történő beillesztése a megfelelő kockázati mérőszám kiválasztása esetén jelentős mértékben képes javítani a Taylor-szabály illeszkedését. _____ The paper investigates the degree to which Hungarian monetary policy has considered country risk in its decisions and if so, how. The answer was sought through the commonest method of analysing a countrys monetary policy: Taylor rules for describing it. The estimation of the rule was prepared using several risk indicators and applying various types of Taylor rules. As a sensitivity analysis, other indicators of inflation and output gap were employed than in the base rule. This showed that the interest-rate decisions of the National Bank of Hungary can be well described by a flexible inflation targeting regime: in the Taylor rules, deviation of inflation from its target has a significant role and the output gap is also significant in one part of the rules. The decision-makers also considered country risk and responded to an increase in it by raising interest rates. Insertion of country risk into the Taylor rule could improve the models fit to an important degree when choosing an appropriate risk measure.

The Euro Area's Tightrope Walk: Debt and Competitiveness in Italy and Spain

- Competitiveness adjustment in struggling southern euro-area members requires persistently lower inflation than in major trading partners, but low inflation worsens public debt sustainability. When average euro-area inflation undershoots the two percent target, the conflict between intra-euro relative price adjustment and debt sustainability is more severe. - In our baseline scenario, the projected public debt ratio reduction in Italy and Spain is too slow and does not meet the European fiscal rule. Debt projections are very sensitive to underlying assumptions and even small negative deviations from GDP growth, inflation and budget surplus assumptions can easily result in a runaway debt trajectory. - The case for a greater than five percent of GDP primary budget surplus is very weak. Beyond vitally important structural reforms, the top priority is to ensure that euro-area inflation does not undershoot the two percent target, which requires national policy actions and more accommodative monetary policy. The latter would weaken the euro exchange rate, thereby facilitating further intra-euro adjustment. More effective policies are needed to foster growth. But if all else fails, the European Central Bank’s Outright Monetary Transactions could reduce borrowing costs.

Odüsszeuszi utazás – az előretekintő iránymutatás tapasztalatai = An Odysseian journey - experience with forward guidance

Az alsó kamatkorlát melletti előretekintő iránymutatás a kamatpolitika helyettesítője, a várakozások és a pénzpiaci hozamok befolyásolásának nem konvencionális monetáris politikai eszköze. A jegybank a piaci szereplők számára előre jelezheti az alacsony kamatkörnyezet tartós fennmaradását (delphoi típus), és kötelezettséget is vállalhat erre (odüsszeuszi típus). Ez utóbbi esetben megváltozik a jegybanki reakciófüggvény: a jegybanki kamatdöntésekben nem az inflációs kilátások és az inflációs cél közötti eltérés, illetve a kibocsátási rés jut kitüntetett szerephez, hanem valamilyen állapotváltozó alakulása vagy az időtényező. A reakciófüggvény változásának hitelessége esetén a hozamok csökkenésére lehet számítani. Ha a jegybank a kamatszint fenntartásának feltételéül az állapotváltozók olyan értékeit jelöli meg, amelyek teljesülése esetén az inflációs célkövetés szabályai szerint amúgy sem emelt volna kamatot, akkor az előretekintő iránymutatás „üres beszéd”, és a hozamokra gyakorolt hatás is elmaradhat. Egyelőre nem eldönthető, hogy az előretekintő iránymutatás a kamatpolitika átmeneti helyettesítőjéből annak tartós kiegészítő elemévé válik-e. _____ Forward guidance is a substitute for interest-rate policy where the zero lower boundary applies. It is an unconventional monetary policy instrument intended to influence market yields and expectations. The central bank may give signals (forecasts) to the market on lasting maintenance of a low interest-rate environment (Delphi type) or may commit itself to do so (Odysseus type). In the latter case the reaction function changes: instead of inflation prospects and output gap, the main role in central bank rate decisions becomes the evolution of given macroeconomic state variables or the time factor. If changes of the reaction function are credible, a drop in security yields are expected. Forward guidance is just cheap talk if such values in economic state variables are set as conditions for keeping interest rates unchanged, which based on the rules of inflation targeting would not trigger an interest rate increase, regardless. In that case, no impact on yields may occur. For the time being it cannot be decided whether forward guidance is transitory or a lasting instrument of monetary policy.

Essays on international macroeconomics and conflict analysis

This dissertation addressed two broad problems in international macroeconomics and conflict analysis. The first problem in the first chapter looked at the behavior of exchange rate and its interaction with industry-level tradable goods prices for three countries, USA, UK and Japan. This question has important monetary policy implications. Here, I computed to what extent changes in exchange rate affected prices of consumer, producer, and export goods. I also studied the timing of these changes in these prices. My results, based on thirty-four industrial prices for USA, UK and Japan, supported the view that changes in exchange rates significantly affect prices of industrial and consumer goods. It also provided an insight to the underlying economic process that led to changes in relative prices. ^ In the second chapter, I explored the predictability of future inflation by incorporating shocks to exchange rates and clearly specified the transmission mechanisms that link exchange rates to industry-level consumer and producer prices. Employing a variety of linear and state-of-the-art nonlinear models, I also predicted growth rates of future prices. Comparing levels of inflation obtained from the above approaches showed superiority of the structural model incorporating the exchange rate pass-through effect. ^ The second broad issue addressed in the third chapter of the dissertation investigated the economic motives for conflict, manifested by rebellion and civil war for seventeen Latin American countries. Based on the analytical framework of Garfinkel, Skaperdas and Syropoulos (2004), I employed ordinal regressions and Markov switching for a panel of seventeen countries to identify trade and openness factors responsible for conflict occurrence and intensity. The results suggested that increased trade openness reduced high intensity domestic conflicts but overdependence on agricultural exports, along with a lack of income earning opportunities lead to more conflicts. Thereafter, using the Cox Proportional Hazard model I studied “conflict duration” and found that over-reliance on agricultural exports explained a major part of the length of conflicts in addition to various socio-political factors. ^

Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Connectionist-based rules describing the pass-through of individual goods prices into trend inflation in the United States

This paper demonstrates a mechanism whereby rules can be extracted from a feedforward neural network trained to characterize the inflation "pass-through" problem in American monetary policy, defined as the relationship between changes in the growth rate(s) of individual commodities and the economy-wide rate of growth of consumer prices. Monthly price data are encoded and used to train a group of candidate connectionist architectures. One candidate is selected for rule extraction, using a custom decompositional extraction algorithm that generates rules in human-readable and machine-executable form. Rule and network accuracy are compared, and comments are made on the relationships expressed within the discovered rules. The types of discovered relationships could be used to guide monetary policy decisions.

El dinero en la historia del pensamiento económico: la teoría monetaria postkeynesiana y su confrontación con la ortodoxia

Las disputas en torno a determinados aspectos del dinero, como su neutralidad y el carácter endógeno o exógeno de la oferta monetaria, han sido permanentes entre las distintas escuelas de pensamiento y autores, estando su origen, probablemente, en la época de desarrollo del pensamiento escolástico. En este artículo pretendemos, en primer lugar, realizar un recorrido cronológico e histórico sobre el tratamiento científico económico del dinero, para, en segundo lugar, poner sobre la mesa la macroeconomía ortodoxa a la que han dado lugar las interpretaciones al respecto, así como los enfoques alternativos frente a este pensamiento dominante. Finalmente, intentamos poner en valor los desarrollos monetarios post-keynesianos, integrados en lo que denominan “Economía Monetaria de Producción”, confrontándolos con la llamada Nueva Síntesis Neoclásica.

Capital 2.0 capital formation and legal risk in a new global economic order from fiat to exit: including case studies of the proposed transatlantic trade and investment partnership between the United States and the European Union and the financing relation between the United States and the People’s Republic of China

Following the intrinsically linked balance sheets in his Capital Formation Life Cycle, Lukas M. Stahl explains with his Triple A Model of Accounting, Allocation and Accountability the stages of the Capital Formation process from FIAT to EXIT. Based on the theoretical foundations of legal risk laid by the International Bar Association with the help of Roger McCormick and legal scholars such as Joanna Benjamin, Matthew Whalley and Tobias Mahler, and founded on the basis of Wesley Hohfeld’s category theory of jural relations, Stahl develops his mutually exclusive Four Determinants of Legal Risk of Law, Lack of Right, Liability and Limitation. Those Four Determinants of Legal Risk allow us to apply, assess, and precisely describe the respective legal risk at all stages of the Capital Formation Life Cycle as demonstrated in case studies of nine industry verticals of the proposed and currently negotiated Transatlantic Trade and Investment Partnership between the United States of America and the European Union, TTIP, as well as in the case of the often cited financing relation between the United States and the People’s Republic of China. Having established the Four Determinants of Legal Risk and its application to the Capital Formation Life Cycle, Stahl then explores the theoretical foundations of capital formation, their historical basis in classical and neo-classical economics and its forefathers such as The Austrians around Eugen von Boehm-Bawerk, Ludwig von Mises and Friedrich von Hayek and most notably and controversial, Karl Marx, and their impact on today’s exponential expansion of capital formation. Starting off with the first pillar of his Triple A Model, Accounting, Stahl then moves on to explain the Three Factors of Capital Formation, Man, Machines and Money and shows how “value-added” is created with respect to the non-monetary capital factors of human resources and industrial production. Followed by a detailed analysis discussing the roles of the Three Actors of Monetary Capital Formation, Central Banks, Commercial Banks and Citizens Stahl readily dismisses a number of myths regarding the creation of money providing in-depth insight into the workings of monetary policy makers, their institutions and ultimate beneficiaries, the corporate and consumer citizens. In his second pillar, Allocation, Stahl continues his analysis of the balance sheets of the Capital Formation Life Cycle by discussing the role of The Five Key Accounts of Monetary Capital Formation, the Sovereign, Financial, Corporate, Private and International account of Monetary Capital Formation and the associated legal risks in the allocation of capital pursuant to his Four Determinants of Legal Risk. In his third pillar, Accountability, Stahl discusses the ever recurring Crisis-Reaction-Acceleration-Sequence-History, in short: CRASH, since the beginning of the millennium starting with the dot-com crash at the turn of the millennium, followed seven years later by the financial crisis of 2008 and the dislocations in the global economy we are facing another seven years later today in 2015 with several sordid debt restructurings under way and hundred thousands of refugees on the way caused by war and increasing inequality. Together with the regulatory reactions they have caused in the form of so-called landmark legislation such as the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, the JOBS Act of 2012 or the introduction of the Basel Accords, Basel II in 2004 and III in 2010, the European Financial Stability Facility of 2010, the European Stability Mechanism of 2012 and the European Banking Union of 2013, Stahl analyses the acceleration in size and scope of crises that appears to find often seemingly helpless bureaucratic responses, the inherent legal risks and the complete lack of accountability on part of those responsible. Stahl argues that the order of the day requires to address the root cause of the problems in the form of two fundamental design defects of our Global Economic Order, namely our monetary and judicial order. Inspired by a 1933 plan of nine University of Chicago economists abolishing the fractional reserve system, he proposes the introduction of Sovereign Money as a prerequisite to void misallocations by way of judicial order in the course of domestic and transnational insolvency proceedings including the restructuring of sovereign debt throughout the entire monetary system back to its origin without causing domino effects of banking collapses and failed financial institutions. In recognizing Austrian-American economist Schumpeter’s Concept of Creative Destruction, as a process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one, Stahl responds to Schumpeter’s economic chemotherapy with his Concept of Equitable Default mimicking an immunotherapy that strengthens the corpus economicus own immune system by providing for the judicial authority to terminate precisely those misallocations that have proven malignant causing default perusing the century old common law concept of equity that allows for the equitable reformation, rescission or restitution of contract by way of judicial order. Following a review of the proposed mechanisms of transnational dispute resolution and current court systems with transnational jurisdiction, Stahl advocates as a first step in order to complete the Capital Formation Life Cycle from FIAT, the creation of money by way of credit, to EXIT, the termination of money by way of judicial order, the institution of a Transatlantic Trade and Investment Court constituted by a panel of judges from the U.S. Court of International Trade and the European Court of Justice by following the model of the EFTA Court of the European Free Trade Association. Since the first time his proposal has been made public in June of 2014 after being discussed in academic circles since 2011, his or similar proposals have found numerous public supporters. Most notably, the former Vice President of the European Parliament, David Martin, has tabled an amendment in June 2015 in the course of the negotiations on TTIP calling for an independent judicial body and the Member of the European Commission, Cecilia Malmström, has presented her proposal of an International Investment Court on September 16, 2015. Stahl concludes, that for the first time in the history of our generation it appears that there is a real opportunity for reform of our Global Economic Order by curing the two fundamental design defects of our monetary order and judicial order with the abolition of the fractional reserve system and the introduction of Sovereign Money and the institution of a democratically elected Transatlantic Trade and Investment Court that commensurate with its jurisdiction extending to cases concerning the Transatlantic Trade and Investment Partnership may complete the Capital Formation Life Cycle resolving cases of default with the transnational judicial authority for terminal resolution of misallocations in a New Global Economic Order without the ensuing dangers of systemic collapse from FIAT to EXIT.

Essays on Omnichannel Sale

Thesis (Ph.D.)--University of Washington, 2016-08

Central banking and inequalities: taking off the blinders

What is the relation between monetary policy and inequalities in income and wealth? This question has received insufficient attention, especially in light of the unconventional policies introduced since the 2008 financial crisis. The article analyzes three ways in which the concern central banks show for inequalities in their official statements remains incomplete and underdeveloped. First, central banks tend to care about inequality for instrumental reasons only. When they do assign intrinsic value to containing inequalities, they shy away from trade-offs with the standard objectives of monetary policy that such a position entails. Second, central banks play down the causal impact monetary policy has on inequalities. When they do acknowledge it, they defend their actions by claiming that it is an unintended side effect, that it is temporary, and/or that any alternative policy would fare even worse. The article appeals to the doctrine of double effect to criticize these arguments. Third, even if one accepts that inequalities should be contained and that today’s monetary policies exacerbate them, is it both desirable and feasible to make containing inequalities part of the mandate of central banks? The article analyzes and rejects three attempts on the part of central banks to answer this question negatively.