Capital account openness promised developing countries a leap in their economic development. Instead, increased inequality, undermined bargaining power, crisis contagion, and procyclicality dismantled the paradigm as a “bogus claim”. The paper therefore calls for a more careful approach to capital mobility in developing as well as developed countries.
Rising inequality and capital accumulation at high-income households bring severe political and economic disadvantages. To tackle misdistribution of income without burdening middle-income households, this paper proposes to increase progressivity of capital income taxation (CaIT).
Positive effects of technical progress on employment have surpassed preceding negative effects in history and will likely do in future. This paper stresses that not only scope but also pace of negative and positive effects must be gauged. It therefore concludes that technical progress is good for employment but only if human capital adjusts quick enough to mitigate labour market disruption.
This paper argues that fiscal policy should not be governed but guided by rules. Rules alone lack legitimacy, accountability, and flexibility, but in a hybrid fiscal architecture they can be alleviated of their detriments while contributing to better fiscal policies.
With regards to recent unexplained developments in inflation, one could think that inflation is “a concern of the past” as it might have lost its influence on economic development or is being balanced out by policy makers so well that it bears little relevance for economists’ anymore. This paper rejects this thesis as it shows that inflation has persistent, even increasing impact on economic development due to globalization, and that inflation is not being balanced well.
Despite the risk of “Mathiness” and a critical reduction of complexity, I argue that mathematical models
should be devoted high value for their ability to efficiently describe scientific insights into the world-in-itself.
Furthermore, the choice of underlying assumptions, deriving real-world recommendations from the model, and working on it as a scientist are normative (and therefore political) actions.