by Summary:
Hardcore neoclassical economist John Taylor has edited a new handbook of macro-economics. The good news: the sands are shifting. After 2008, more attention has been paid to the obvious fact that we’re living in a monetary world. Guess what: it turns out that money is non-neutral after all. Two examples (summaries below): (A) Bordo and Meissner claim that whenever a country has a large banking sector it has a choice, during a financial crisis. It can bail out the banks or it can try to mitigate the crisis and prevent unemployment to increase to extreme levels. And (B): Mian and Sufi’s work implicates that the ‘representative consumer’ is bogus: differences between renters and house owners in combination with data on indebtedness and house price booms and busts explain a lot of the
Topics:
Mike Norman considers the following as important: money neutrality
This could be interesting, too:
Hardcore neoclassical economist John Taylor has edited a new handbook of macro-economics. The good news: the sands are shifting. After 2008, more attention has been paid to the obvious fact that we’re living in a monetary world. Guess what: it turns out that money is non-neutral after all. Two examples (summaries below): (A) Bordo and Meissner claim that whenever a country has a large banking sector it has a choice, during a financial crisis. It can bail out the banks or it can try to mitigate the crisis and prevent unemployment to increase to extreme levels. And (B): Mian and Sufi’s work implicates that the ‘representative consumer’ is bogus: differences between renters and house owners in combination with data on indebtedness and house price booms and busts explain a lot of the
Topics:
Mike Norman considers the following as important: money neutrality
This could be interesting, too:
Mike Norman writes Lars P. Syll — On the non-neutrality of money
Mike Norman writes Dirk Ehnts — Minsky in 1993 on the Non-Neutrality of Money
Mike Norman writes Brian Romanchuk — Primer: Money Neutrality
Hardcore neoclassical economist John Taylor has edited a new handbook of macro-economics. The good news: the sands are shifting. After 2008, more attention has been paid to the obvious fact that we’re living in a monetary world. Guess what: it turns out that money is non-neutral after all. Two examples (summaries below):
(A) Bordo and Meissner claim that whenever a country has a large banking sector it has a choice, during a financial crisis. It can bail out the banks or it can try to mitigate the crisis and prevent unemployment to increase to extreme levels.
And (B): Mian and Sufi’s work implicates that the ‘representative consumer’ is bogus: differences between renters and house owners in combination with data on indebtedness and house price booms and busts explain a lot of the severity of the 2008 crisis....Real-World Economics Review Blog
Modern macro-economists: money is not ‘neutral’. Bordo, Meissner, Sufi and Mian do a good job.
Merijn Knibbe
"Countries can have two of the following three choices: a large financial sector, fiscal bailouts devoted to financial crises, and discretionary fiscal policy aimed at raising demand during the recessions induced by financial crises."
This does not specify the monetary regime assumed and, furthermore, it assumes a government that is not sovereign in its currency.
A currency sovereign has the option of allowing a large and lightly regulated financial sector, bailing out the financial sector in financial crises, and also supporting the economy with stimulus when contraction threats owing to lagging demand.
The second study is based on the wealth effect. This is hardly controversial since the Fed admitted using it in its approach to stemming the financial crisis.
Christian Arnsperger and Yanis Varoufakis
See also
The first axiom of neoclassical economics: methodological individualism