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St Catharine's Political Economy Seminar Series


Date: Wednesday 17 October 2018
Time: 18:00 -19:30
Speaker: Richard Werner
Talk Title: 'Scientific Macroeconomics and the Quantity Theory of Credit’
LocationRamsden Room, St Catharine's College

The seminar series is supported by the Cambridge Journal of Economics and the Economics and Policy Group at the Cambridge Judge Business School.

An audio recording of the presentation is here:

Richard Werner is Professor and Chair in International Banking at the University of Southampton (since 2005), and is founding director of the Centre for Banking, Finance and Sustainable Development. He is a Member of Linacre College, Oxford, Convenor of the Association for Research on Banking and the Economy (ARBE), and member of the ECB Shadow Council. He is also the founding chair of Local First, a community interest company establishing not-for-profit community banks in the UK, starting with the Hampshire Community Bank. Richard previously was a Professor of monetary, macro and development economics at Goethe-University Frankfurt and assistant professor at Sophia University, Tokyo. In 1992, as European Commission Fellow at Oxford, Richard integrated the banking system in a macroeconomic model able to distinguish between the impact of bank credit on asset markets and economic growth (the 'Quantity Theory of Disaggregated Credit'), and warned of the coming banking crisis and deep recession in Japan. In 1995 he advanced a post-banking crisis monetary policy to stimulate the economy, which he called 'Quantitative Easing' (followed in 1998 by 'Enhanced Debt Management'). 

In 2003 he warned of the credit-driven asset bubbles and crises in the eurozone. Richard has published in journals and in books.

Talk Overview
Alison in Wonderland was not an equilibrium economist: she only believed six impossible things before breakfast (equilibrium economists need to believe at least eight impossible things). Scientific research methodology is reviewed and it is proposed to also deploy it in economics. Doing this, key features of how actual economies work can be established. It is seen that all markets must be expected to be rationed (i.e. in disequilibrium). Scientific methodology also helps in identifying the link between the financial system and the real economy, including sustainable development, the role of interest rates, money and the existence and functioning of banks. It is seen how to predict and prevent boom-bust cycles, banking crises and subsequent recessions, as well as how to react appropriately once they happen, without burdening the tax payer. The role of central banks is also discussed, as well as their reaction to the empirical refutation of their longstanding preferred narrative.


Please contact the seminar organisers Philip Arestis ( and Michael Kitson ( in the event of a query.


Wednesday, 17 October, 2018 - 18:00 to 19:30