Brian Romanchuk — Money Demand Has Very Little To Do With Recessions

Summary:
One often encounters assertions that recessions are the result of an excess demand for money (or some variant), based on various equilibrium arguments. Although one could superficially interpret recessions in such a fashion, the issue is that this interpretation does not help analyse the business cycle. In other words, it is a non-falsifiable statement that offers no useful information. In my view, discussions involving "money" or "safe assets" provide us an example regarding the limited usefulness of mainstream economic theory for business cycle analysis. Bond Economics Money Demand Has Very Little To Do With RecessionsBrian Romanchuk

Topics:
Mike Norman considers the following as important: business cycle, causal explanation, financial cycle, recessions

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