Tag Archives: Monetary Policy

Rather than attempt to explain what the mainly neoclassical economists are going on about, I want to step back and try to translate their debate into terms that would be understood by people who do not share the same assumptions. I am pretty sure that post-Keynesian economists have a lot to say about the topic as well, but once again, they tend to be discussing wonkish points that would elude an outsider.…I have an engineering background, and engineering is largely the science of...

I am delighted to be in Helsinki at this important conference on monetary policy and the future of Europe's monetary union. Today I would like to discuss the broad review of the Federal Reserve's monetary policy framework that my fellow policymakers and I are undertaking this year. We are examining the policy strategy, tools, and communication practices that we use to pursue our dual-mandate goals of maximum employment and price stability. In my remarks, I will describe the motivation for...

While Lagarde said MMT is no panacea, she didn’t reject it outright.“While it is tempting, when you look at the sort of mathematical modeling of it, and it seems to stand, there are big caveats about it, such as if the country is in a liquidity trap, such as if there is deflation. Well then, in those circumstances, it could possibly work for a short period of time probably, because interest rates stay low until such time when they start going up. And then it is a bit of a trap.”-- April 11,...

It is Wednesday and so a less intensive blog post. Note how I no longer claim it will be shorter. The less intensive claim refers to how much research I have to put in to write the post. Apart from some beautiful music, the topic for today is yesterday’s RBA decision to cut interest rates to record low levels. The decision won’t save the economy from recession and highlights the sort of desperation that central bankers now face as governments shunt the responsibility of counterstabilisation...

T Sabri Öncü ([email protected], @tsoncu) is an economist based in İstanbul, Turkey. This article was sent on 7 June 2019 and published first on 15 June 2019 in the Indian journal Economic and Political Weekly.  Summary: Would market volatility amidst global trade tensions and uncertainty cause a global recession? Although...

If there were two lessons that can be taken from the GFC among others then we should know, once and for all, that, first, monetary policy (in all its glorious forms these days) is not a very effective tool for influencing the level of economic activity nor the price level, and, second, that fiscal policy is very effective in manipulating total spending and activity. Of course, those lessons provided the evidence that turned macroeconomics on its head because for several decades, as the...

Dirk Ehnts asks, what zero lower bound.econoblog 101Monetary policy and the zero lower … oh, wait!Dirk Ehnts | Lecturer at Bard College Berlin

Economies are human constructs, not inevitable natural phenomena. Humans make up the rules that participants must follow when playing the game, and as the economy grows and evolves, humans must change the rules of play in ways that optimize the well-being of the majority of participants. In this piece, we argue that the MMT fiscal policy proposition of government spending into the private sector, with inflation being the only limiting factor, is not only needed for a real recovery from the...

Whether the UK finally leaves or remains a Member of the EU, progressives are generally united in viewing the existing Treaty and legislative rules on economic policy as dangerously dysfunctional. In their second joint paper on the theme, emeritus Professor John Weeks and PRIME co-director Jeremy Smith set out proposals for “Economic Guidelines...

A version of this post appeared on Pieria in December 2013.  In my post “The desert of plenty”, I described a world in which goods and services are so cheap to produce that less and less capital is required for investment , and so easy to produce that less and less labour is required to produce them. Prices therefore go into freefall and there is a glut of both capital and labour. This is deflation. There are two kinds of deflation. There is the “bad” kind, where asset prices go...