Introduction:

In an important strand of his comprehensive research Hansjörg Herr – together with different co-authors – has spelled out the institutional features and the main economic policy conditions that define functional macroeconomic policy regimes from a Keynesian perspective. More recently he has become preoccupied with the concept of a 'decent capitalism' as a blueprint for reforming economies in both an economically and socially beneficial manner. Most certainly, macroeconomic policy – and above all fiscal policy – in most Euro area countries have been characterised by almost the exact opposite of a functional macroeconomic policy regime: Since 2010 fiscal policy has been dominated by strict austerity measures implemented under the 'reformed' Stability and Growth Pact (SGP) and the 'fiscal compact' (FC). From a Keynesian perspective the outcome in terms of devastating economic, social and political consequences was predictable.

Since summer 2014 the calls for a more expansionary fiscal policy in the euro area have become louder: In his Jackson Hole speech, Mario Draghi called for a more expansionary fiscal stance for the Euro area as a whole and a public investment programme insisting, however, that the existing rules of the SGP be respected. The European Council in June 2014 also saw the need to enhance growth, respecting, however, the current institutional framework.