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The Political Economy of Growth Models in an Age of Stagnation

The 2008 Global Financial Crisis has led to a period of stagnation and divergent economic growth performances. The project investigates institutional sources of such divergent growth, considering both macroeconomic and institutional factors as well as their interaction. Specifically, we study (i) whether differences in financial and housing institutions explain why some countries were hit harder by financial downturns; (ii) whether differences in industrial relations and skill policies determine the successfulness of maintaining growth through exports; (iii) whether differences in fiscal and monetary policy coordination explain the use of government spending to support growth.

At the theoretical level, the project combines post-Keynesian macroeconomics with a comparative institutionalist analysis of demand formation at the national, sectoral, and actor level. Empirically, we focus on the growth experiences of European countries, considering northern Europe as the export-oriented industrial core, Anglo-Saxon countries as the financial core, and southern Europe as the financialised periphery.

The project builds on previous research of the team's members: Engelbert Stockhammer's work on Post-Keynesian macroeconomic foundations for Comparative Political Economy; Karsten Kohler's and Engelbert Stockhammer's research on financial cycles, austerity, and competitiveness in growth models since the Global Financial Crisis; Chiara Benassi's work on the role of industrial relations institutions for export performance; and Inga Rademacher's research on the role of fiscal-monetary relations for economic policy outcomes.

Research associates


  • Work package one investigates financial instability as a cause of divergence. It provides a theoretical and empirical analysis of how institutions such as property taxation, mortgage restrictions, and public housing influence booms and bust in house prices and in private debt, and why some countries are more exposed to destabilising international capital flows than others. Researchers: Prof Engelbert Stockhammer and Dr Karsten Kohler (lead), Ben Tippet (research associate) and Ciarán O’Flynn (research associate).

  • Work package two explores whether differences in export structures (i.e., the quality of exports) can be explained through resilient or shifting labour market institutions, which are likely to influence dominant human resource practices at the firm and sectoral level. The aim is to examine the institutional determinants of national export strategies as explanatory factors of divergent performance. Researchers: Dr Chiara Benassi (lead), Guendalina Anzolin (research associate) and Joshua Cova (research associate)

  • Work package three examines whether institutional relations between the fiscal and monetary sphere shaped fiscal policy since the Global Financial Crisis. It examines empirically how formal rules, collective norms and expert authority of central banks shaped fiscal outcomes in countries inside and outside the European Monetary Union (EMU). Researchers: Dr Inga Rademacher (lead), Ian Lovering (research associate) and Jose Tomas Labarca (research associate)


In times of increasing economic and political fragmentation, our project will develop insights into the institutional sources of diverging growth trajectories across Europe. At the academic level, the project has the potential to be agenda-setting for research in Comparative Political Economy (CPE) by providing macroeconomic foundations for CPE’s institutional analyses. At the policy level, the project will identify institutions that can be beneficial for stable economic growth, e.g. financial and housing institutions that curb unstable financial dynamics, labour market institutions and skill policies that support technological upgrading, and insights into how the coordination between central banks and finance ministries stabilise public demand in times of crises.

Project status: Ongoing

Principal Investigator



Funding Body: Leverhulme Trust

Amount: £275366

Period: October 2021 - September 2023