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Will only an earthquake shake up economics?
Author(s) -
SCHETTKAT Ronald
Publication year - 2010
Publication title -
international labour review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.433
H-Index - 46
eISSN - 1564-913X
pISSN - 0020-7780
DOI - 10.1111/j.1564-913x.2010.00083.x
Subject(s) - deflation , economics , unemployment , context (archaeology) , keynesian economics , recession , great recession , macroeconomics , full employment , core (optical fiber) , natural rate of unemployment , labour economics , monetary policy , unemployment rate , paleontology , materials science , composite material , biology
. “Natural rate theory”, the Efficient Market Hypothesis and its labour market application dominated interpretations of economic trends and policy prescriptions from the 1970s onwards, with their views of public policy and regulation as distorting otherwise well‐functioning free markets. The upheaval of the current crisis is shaking these theories to the core. In this context, Schettkat examines European experience from the 1990s onwards and shows the theories to be unsubstantiated: high unemployment persisted post‐recession despite structural reforms to labour market institutions, and the resumption of economic growth was hindered by then‐dominant deflationary monetary and fiscal policies inspired by these theories.