Book Received
INDEX
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Section C) Regional integration processes
    Subsection 6.The European unification process
    Győrffy Dóra
    Institutional Trust and Economic Policy Lessons from the History of the Euro
    Ed. Central European University Press , Budapest , 2013
    Page 204
    ISBN 978-615-5225-22-2
    The book seeks to link theoretical debates on the relevance of trust in economic outcomes with the current arguments about the origins and lessons of the subprime crisis. By what mechanisms does trust influence economic outcomes? Under what conditions do these mechanisms prevail? How do debates about trust help our understanding of the subprime crisis in the European Union? By integrating insights from Post-Keynesian, Austrian and new institutional economics, the central proposition of the analysis is that the presence or absence of institutional trust creates virtuous and vicious cycles in law-abiding, which critically influence the possibility for economic agents to have realistic long-term plans. In a low-trust environment the uncertainty surrounding the functioning of institutions leads to short-term decisions. Political business cycles, lax regulations on credit and boom-bust cycles are typical of such an environment. While empirical evidence from the EU largely supports these propositions, important exceptions are also identified and the conditions for the theory noted–including financial market influences, fashions in economic theory as well as political leadership
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