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- Title
MONETARY NATIONALISM AND AND INTERNATIONAL ECONOMIC INSTABILITY.
- Authors
HOFFMANN, ANDREAS; SCHNABL, GUNTHER
- Abstract
This paper describes the international transmission of boom-and-bust cycles to small periphery economies as the outcome of excessive liquidity supply in large center economies, based on the credit cycle theories of Hayek, Mises, and Minsky. We show how too-expansionary monetary policies can cause overinvestment cycles and distortions in the economic structure on both the national and the international level. Feedback effects of crises in periphery countries on center countries trigger new rounds of monetary expansion in center countries, which bring about new credit booms and international distortions. Crisis and contagion in globalized goods and financial markets indicate the limits of purely national monetary policies in countries, which provide the asymmetric world monetary system with an international currency. This makes the case for a monetary policy in large countries that takes responsibility for its long-term effects on goods and financial markets in both the center and the periphery countries of the world monetary system.
- Subjects
BUSINESS cycles; LIQUIDITY (Economics); MONETARY policy; SUPPLY &; demand; FINANCIAL crises
- Publication
Quarterly Journal of Austrian Economics, 2013, Vol 16, Issue 2, p135
- ISSN
1098-3708
- Publication type
Article