Macroeconomic policy making lessons from austro keynesianism franz nauschnigg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 14

Macroeconomic Policy Making: Lessons from Austro-Keynesianism Franz Nauschnigg PowerPoint PPT Presentation


  • 49 Views
  • Uploaded on
  • Presentation posted in: General

Macroeconomic Policy Making: Lessons from Austro-Keynesianism Franz Nauschnigg. Outline. The main features of Austro-Keynesianism Austro-Keynesianism and EU-membership Innovative expansionary demand management measures Economic results of Austro-Keynesianism - unemployment, growth

Download Presentation

Macroeconomic Policy Making: Lessons from Austro-Keynesianism Franz Nauschnigg

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Macroeconomic policy making lessons from austro keynesianism franz nauschnigg

Macroeconomic Policy Making: Lessons from Austro-KeynesianismFranz Nauschnigg

ETUC Conference: 1-2 March 2005


Outline

Outline

  • The main features of Austro-Keynesianism

  • Austro-Keynesianism and EU-membership

  • Innovative expansionary demand management measures

  • Economic results of Austro-Keynesianism - unemployment, growth

  • From Austro-Keynesianism to neo liberal paradigm

  • Economic results of neo liberal paradigm - unemployment, growth

  • Conclusions

ETUC Conference: 1-2 March 2005


Austro keynesianism

Austro-Keynesianism

  • 1970s/80s: Replacing the Keynesian demand management by monetarist and neoliberal economic policies almost everywhere in the western world!

  • Everywhere? NO!

  • A small country - Austria - remained wedded to Keynesian thinking: „Austro-Keynesianismus“

ETUC Conference: 1-2 March 2005


Austro keynesianism main features

Austro-Keynesianism – main features

  • Counter cyclical demand management - fiscal policy

  • Orthodox hard currency policy peg to DM

  • Supply side policies - especially incentives for investment

  • Strong role of social partners - productivity oriented wage policy

  • Stabilisation of expectations of economic agents

  • Combined use of policy instruments

ETUC Conference: 1-2 March 2005


Austro keynesianism and eu membership

Austro-Keynesianism and EU-membership

  • EU-Membership in 1995 - a big challenge for Austro-Keynesianism

  • Biggest structural reform - short term adjustment costs, long term benefits come only later (J-curve)

  • Budget deficit 5,3% of GDP had to be brought down fast for EMU membership - fulfilling the convergence criteria

  • Room of manoeuvre for fiscal policy limited by EU framework

ETUC Conference: 1-2 March 2005


Innovative expansionary demand management measures in austro keynesianism

Innovative expansionary demand management measures in Austro-Keynesianism

  • Combining restrictive fiscal policy 100 bn ATS (7,2 bn € over 3% of GDP) with supply and macro policies:

    • Increasing the tax rate on interest income

    • Lowering subsidies for saving and linking it to interest rates

    • using tax exemptions in the housing sector by spending existing reserves

  • Innovative expansionary package in 1996:

    • 90 bn ATS (6,5 bn €)

  • Shifting of public investment to the private sector

  • A particular sort of public private partnership (PPPs)

    - creating private entities owned by the state

ETUC Conference: 1-2 March 2005


Advantages of ppp demand management

Advantages of PPP demand management

  • Treating investment differently - depreciation over lifetime

  • Gaining efficiency and flexibility

  • No increase of the budget deficit

  • Low financing costs

  • combination of the strength of the private and public sector

  • combination of fiscal consolidation and growth

ETUC Conference: 1-2 March 2005


Macroeconomic policy making lessons from austro keynesianism franz nauschnigg

ETUC Conference: 1-2 March 2005


Gross domestic product per inhabitant in purchasing power standards eu 15 100

GROSS DOMESTIC PRODUCT PER INHABITANT (in Purchasing Power Standards) EU-15= 100

ETUC Conference: 1-2 March 2005


From austro keynesianism to neo liberal paradigm

From Austro-Keynesianism to neo liberal paradigm

  • Social democrats lost power (2000)

    Austro-Keynesianism replaced by neo liberalism

  • IMF (2004):“Since the turn of the decade, a strategic policy shift has made Austria a showcase of reforms and placed it at the forefront of the EU (in terms of implementing the Lisbon-Agenda).“

ETUC Conference: 1-2 March 2005


Macroeconomic policy making lessons from austro keynesianism franz nauschnigg

ETUC Conference: 1-2 March 2005


Macroeconomic policy making lessons from austro keynesianism franz nauschnigg

ETUC Conference: 1-2 March 2005


Economic results of the neo liberal paradigm

Economic results of the neo liberal paradigm

  • Increase in unemployment – faster than EU-average

    • from 3,7% in 2000 to 4,2% in 2004

  • Weak growth performance - Contrary to IMF prognosis

    • Austrian GDP per capita (PPS) from 114% of EU-average in 2000 to 110% in 2005

  • Austrian budget deficit no substantial changes

    • forecasted to increase to 2% in 2005

ETUC Conference: 1-2 March 2005


Conclusions

Conclusions

  • Structural reforms bring with them short term costs, the benefits are higher only in the long term - J curve effect

  • Microeconomic reforms should therefore be supported by expansionary macroeconomic policies

  • Innovative demand management policies e.g. PPP demand management, countercyclical use of the tax system and of subsidies

  • In terms of growth and employment Austro-Keynesianism was more successful than the current economic policy approach of Austria

ETUC Conference: 1-2 March 2005


  • Login