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:The Macroeconomic Policy Institute (IMK)

The Macroeconomic Policy Institute (IMK) is an independent academic institute within the Hans-Böckler-Foundation, a non-profit organisation fostering co-determination and promoting research and academic study. The Foundation is linked to the German Confederation of Trade Unions (DGB). The IMK was founded in 2005 to strengthen the macroeconomic perspective both in economic research and in the economic policy debate. The IMK analyses business cycle developments and conducts economic policy research, notably on fiscal and monetary policy, labour markets, income distribution and financial markets. The Institute seeks to address the challenges facing macroeconomics and economic policy in the wake of the global financial crisis.

Keyvisual FMM Conference 2023 Inflation Distributional Conflict Transition

8th International FMM Summer School

The summer school aims at providing an introduction to Keynesian macroeconomics and to the problems of European economic policies to interested graduate students (MA and PhD) and junior researchers. It will consist of overview lectures, a panel discussion, student study groups, an SFC lab, and a poster session.

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Current Publications

FMM Working Paper No. 89 : How large are hysteresis effects? Estimates from a Keynesian growth model

This paper estimates a demand-led model of macroeconomic growth and fluctuations in which the growth rate of the economy’s supply side converges to the growth rate of demand. Convergence happens because labor supply and productivity growth respond to the degree of slack in the economy. Faster demand growth reduces slack and stimulates supply (and vice-versa). We estimate the model using simulated method of moments and find statistically significant and quantitatively important hysteresis effects: the semi-elasticity of productivity and labor supply to the unemployment rate are 0.73 and 0.26, respectively.

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IMK Working Paper No 218 : The "Baqaee-Farhi Approach" and a Russian gas embargo

In a controversial policy paper, Bachmann et al. (2022) argued back in March 2022 that the economic effects for Germany of a complete immediate stop of energy imports from Russia would be small, between 0.5% and 3% of GDP. Baqaee et al. (2022) even presented 0.3% GDP loss in the case of an embargo as the headline number in a follow-up report for the French Council of Economic Analysis (CAE).

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IMK Working Paper No. 217 : What Drives Drilling Up and Prices Down?

Between June 2008 and April 2012 natural gas prices in the U.S. dropped by 85%. The reason for this was not only the expansion of fracking, but above all the weak demand following the financial crisis of 2008. Therefore, even with a comparatively rapid expansion of shale gas production, no one should expect a price decline similar to that seen in the United States after 2008.

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FMM Working Paper No. 88 : Keynes’ denial of conflict: why The General Theory is a misleading guide to capitalism and stagnation

Keynes’ General Theory was a massive step forward relative to classical economics, but it was also a step backward in its denial of the conflictual nature of capitalism. There is need to understand Keynes’ technical contributions regarding the workings of monetary economies, but also need to understand the flaws within his thinking and the consequences thereof. Keynes made a fundamental contribution elucidating the mechanism of effective demand, and he also has claim to be the preeminent monetary theorist.

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FMM Working Paper No. 87 : Central bank balance sheets under foreign exchange accumulation: insights from endogenous money theory and monetary policy implementation

The present article proposes to draw on the recent experiences of many central banks of advanced economies and the evolution of their operational frameworks in the new context of increased domestic liquidity, when analysing the operations of central banks that engage in exchange rate management and increase their official foreign reserves as a result.

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FMM Working Paper No. 86 : Achieving two policy targets with one policy instrument: Heterogeneous expectations, countercyclical fiscal policy, and macroeconomic stabilization at the effective lower bound

We explore the short-term macrodynamics of stabilization policy at the effective lower bound (ELB) of the nominal interest rate, in an environment characterized by heterogenous and endogenously time-varying private-sector output and inflation expectations driven by evolutionary dynamics. We show that at the ELB, fiscal policy conducted in accordance with a well-specified policy rule is particularly effective for purposes of macroeconomic stabilization.

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