Public Banking and Post-Keynesian Economic Theory

Marshall, Wesley C.; Rochon, Louis-Philippe

doi:10.1080/08911916.2018.1550947

Cited by 31 publications

(8 citation statements)

References 20 publications

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“…The economic and social impact of public investment depends critically on its effectiveness, so governments and local authorities must be rigorous in their decisions on public investment and in directing public funds to those public investments that really meet the related development requirements regarding the needs of society, especially in the context of the existence of limited resources against the background of unlimited needs [3].…”

Section: Introductionmentioning

confidence: 99%

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Ocolișanu

Dobrotă

2022

Sustainability

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The relationship between sustainable growth and public investment, considered one of the key factors, is a topic of interest in the context of globally adopted sustainable development strategies and current budgetary constraints, especially in the case of tight budgets in developing countries, which constrain public investment more than current expenditure, for political or other reasons. Although there are endogenous growth patterns that incorporate public spending as a factor that promotes growth, the findings in the empirical literature provide contradictory results. The study is an empirical investigation into the effects of public investment on sustainable economic growth in emerging EU and Central European countries. For the period 1995–2019, the research shows that, in most of the countries included in the sample, the long-term impact of a public capital shock on GDP is estimated to be negative. The analysis of the effect of public investment on sustainable economic growth was performed by applying the VAR model and impulse response functions, the results being confirmed by estimating the accumulated multiplier to obtain the GDP response to a shock equal to a standard deviation of public capital.

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Section: Introductionmentioning

confidence: 99%

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Ocolișanu

Dobrotă

2022

Sustainability

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“…The article refers to the main foundations that define the labor market and the problem of unemployment, presenting a contrast between the orthodox current of thought and the Keynesian theory (Marshall & Rochon, 2019;Stockhammer & Ali, 2018). It is concluded that the General Theory is not the only or the most complete argumentation of unemployment as it appears in the economy today, but it has the merit of having provided an explanation and alternative solutions to the scourge of unemployment experienced in United States in the thirties of the last century (Eichengreen, 2020;Fazzari, 2020).…”

Section: Introductionmentioning

confidence: 99%

Some Elements About the Classical Employment Theory and the Keynesian Perspective

Argoti

Samuleson

2022

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The fundamental aim of this paper is to lay out essential elements concerning classical economic theory about employment, and compare them with the Keynesian approach. In other words, this document shows a comparative-contrasting study of the classical and more modern theoretical claims, concerning employment. Since employment is a crucial variable related to economic growth and development, this paper is focused on a revision of conceptual issues concerning such a critical indicator. The approach presented here is important not only for professional economists but also for other social scientists. One of the major conclusions of this study is referred to the evidence that the Keynesian “General Theory” is not precisely the most completed and updated theoretical approach to solve problems of employment, but it has a particular richness in its contents that is important to rescue; in fact that theory was extremely useful to undertake unemployment and economic growth problems during the Great Recession in the United States.

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“…At the time of writing, there is a burgeoning literature in Post-Keynesian economics advocating for public banks as a counterweight to private financial intermediaries' prioritization of profits over more democratic provision of credit, contributions to income and wealth inequality, and promotion of financial instability that has underpinned economic instability and crisis, exemplified by the decades preceding the 2008 Global Financial Crisis (GFC). (Seccareccia, 2011;Marshall and Rochon, 2019;Herndon and Paul, 2020) Germany, one of the core economies of the European's Economic and Monetary Union (EMU), has had a history of public banking since the 19 th century, with large state-level banks, Landesbanks, and smaller savings banks, Sparkassen, that were designed to provide credit to households and domestic firms ignored by private banks, and continue to serve the largest share of the German public's credit and depository needs. (Deeg, 1999;Lewis, 2011) Interestingly, the Post-Keynesian literature on public banking thus far has not presented Landesbanken and Sparkassen as potential models for public banking in countries like the US and Canada, despite the importance Sparkassen played in sustained lending to German households and small and medium enterprises (SMEs) in the aftermath of the GFC.…”

Section: Introductionmentioning

confidence: 99%

German Public Banks, Financial Competition, and Crisis: Institutional Change in German Banking and Financial Vulnerability Before the Global Financial Crisis

Eichacker¹

2020

Preprint

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This paper asks why Landesbanks, public banks designed to provide credit to German firms in regions underserved by private banks, embraced risky asset and liability balances in the years before the Global Financial Crisis, and subsequently lost billions of dollars in write-downs after the US subprime mortgage bubble burst in 2007. It argues that the German government’s decisions to eliminate protections for Landesbanks increased competitive pressure for public banks, increased the propensity for those banks to adopt risky strategies in order to maximize profits. These actions by Landesbanks and large private banks exposed German households and firms to greater risk and financial vulnerability, and indirectly exposed European financial systems to subprime mortgage risk. It uses balance sheet analysis for different sectors of German finance to show that Landesbanks and Germany’s large private banks adopted higher risk asset and liabilities, engaged in more international activity, and shifted from lending to security acquisition while competing for profits, while Sparkassen, small public savings banks, did not adopt such risky strategies, and successfully shielded German households and small businesses from credit market spillovers following the Global Financial Crisis. The paper contributes nuance to debates about whether public banks are beneficial institutions to promote, and shows that Landesbanks’ failures stemmed from external pressures for them to increase their profits, which increased financial and economic instability in Germany and beyond.

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Public Banking and Post-Keynesian Economic Theory

Cited by 31 publications

References 20 publications

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

The Effects of Public Investment on Sustainable Economic Growth: Empirical Evidence from Emerging Countries in Central and Eastern Europe

Some Elements About the Classical Employment Theory and the Keynesian Perspective

German Public Banks, Financial Competition, and Crisis: Institutional Change in German Banking and Financial Vulnerability Before the Global Financial Crisis

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