A hybrid standard macro model is supplemented by an explicit analysis of bank lending, based on a five-position aggregative balance sheet. In the model's two versions credit supply is based on a leverage targeting rule or on simple optimisation, taking into account lending risks and funding...

Economists in the public are accused of propagating highly professional, but unrealistic theories that mislead market agents and policy makers to place too much confidence in rational behaviour and market equilibrium. The paper analyses to what extent the US banking crisis and the euro crisis...

Böhm-Bawerk defines the rate of interest as the ratio of intertemporal goods prices, but cannot show the emergence of interest as a financial market price. The alleged efficiency ofroundabout production methods is ill-suited to derive a uniform rate of return of capital. Time preference may...

Gaps in competitiveness, rooted in economic as well as in political factors, characterise postwar European economic history. The eurozone experience showed the emergence of large current account imbalances. The peculiar mixture of financial markets integration and national cycles in wages and...

The growth and deepening of financial markets entailed the expectation that the bank lending channel of monetary policy transmission would lose its importance. The paper explains why, on the contrary, the banking sector has become a major locus of origination and amplification of macro-financial...

Die Staatsschuldenkrise einiger Länder in der EWU ist letztlich doch eine Währungskrise. Nur im gemeinsamen Währungsraum war es überhaupt möglich, die Schuldaufnahme stark auszuweiten. Andererseits treten bei Zweifeln an der finanziellen Solidität von Schuldnerstaaten kumulative...

Low inflation on goods markets provides no reliable precondition for asset-market stability; it might even promote the emergence of bubbles because interest rates and risk premia appear to be low. A further factor driving asset demand is easy availability of credit, which in turn roots in the...

Liquidity preference theory had a hard time to defeat the loanable funds approach because Keynes himself failed to elucidate the financing of investment in the "General Theory". Liquidity preference is a key element in the credit supply decision of the banking system. Liquidity premium is an...

Old OCA theory recommends to unite homogenous countries so that their macroeconomic interrelations do not pose severe stabilisation problems. New OCA theory rightly criticizes the 1960s flavour of the old approach and believes in the endogenous emergence of an OCA if countries use the facilities...