1. Taylor Rule, Solvency Rule and the ‘Mezzogiornification’ of Europe Presentation prepared for the New Thinking in Economics Conference “International Economic Policies, Governance and the New Economics”, Thursday 12 April 2012 St Catharine's College, Cambridge, United Kingdom By Emiliano Brancaccio and Giuseppe Fontana

2. Introduction Taylor Rule versus Solvency Rule –TR > NCM/Solow growth model –SR > Alternative Keynesian framework/Monetary Circuit Solvency rule in a monetary union –Monetary policy and centralisation of capital –Centralisation and “Mezzogiornification” –The effectiveness of devaluation

5. Taylor rule vs. Solvency rule

6. Solvency rule in a monetary union A core-periphery model of capital concentration –Main theoretical features –The solvency rule for two countries Equation 5 and 5’ A graphical representation

9. Solvency rule in a monetary union Some policy implications of the core- periphery model of capital concentration –Capital centralisation and “Mezzogiornification” –The effectiveness of devaluation

10. Conclusions Taylor Rule versus Solvency Rule –TR > NCM/Solow growth model –SR > Alternative Keynesian framework/Monetary Circuit Solvency rule in a monetary union –Monetary policy and centralisation of capital –Centralisation and “Mezzogiornification” –The effectiveness of devaluation