Belka-gate – the Polish version of the Sumner Critique?

A key Market Monetarist insight (it is New Keynesian insight as well…) is that budget multiplier is zero if the central bank says it is so. Or rather it the central bank targets inflation, the price level or nominal GDP then the central and will offset any shock – positive or negative – to nominal […]

No ‘General Theory’ should ignore the monetary policy rule

John Maynard Keynes famously titled his magnus opus from 1936 The General Theory of Employment, Interest and Money. However, General Theory, as it is generally known, is nothing of the kind. It is not a General Theory of macroeconomics – rather it is a specific theory of macroeconomics making very specific assumptions about the workings […]

Christmas musings on life, money and blogging

As year is coming to an end I am sure that a lot of you like myself are reflecting on life and the world you live in. Here is a bit of what I have been thinking about this year and about what I think will be my focus in my blogging in the coming […]

It is time to stop worrying about austerity – also in the UK

I have a piece in City AM today on the impact of fiscal austerity in the UK: FIVE years ago, nearly every macroeconomist agreed that central banks determined aggregate demand (total spending in the economy), and that fiscal stimulus was therefore unnecessary to lift depressed economies. Conversely, fiscal austerity was seen as irrelevant at best […]

Airport musings on India, Danish efficiency and Larry Summers

I am writing this while I am sitting in London’s Heathrow Airport (Terminal 5) after having spent a couple of days in London. To be quite frank I think I have been suffering from a bit of writer’s block in the past couple of weeks – maybe because I have been too busy with other […]

The monetary transmission mechanism in a ‘perfect world’

I fundamentally think that what really sets Market Monetarism aside from other macroeconomic schools it how we see the monetary transmission mechanism. I this blog post I will try to describe how I think the monetary transmission mechanism would look like in a ‘perfect world’ and how in such a perfect world the central bank […]

“Grim23” on fiscal policy versus monetary policy in Australia

By a complete accident I found a online debate about fiscal policy versus monetary policy in Australia. One of the commentators – “Grim23” – surely is a convinced Market Monetarist. I thought what he is writing is so good that I want to reproduce it here on my blog – I hope he won’t mind… […]

I don’t care who becomes BoJ governor – I want better monetary policy rules

UPDATE: I have edited my post significantly – I misread what Scott really said. That is the result of writing blog posts very early in the morning after sleeping too little. Sorry Scott… Scott Sumner has a blog post on who might become the next governor of Bank of Japan. Scott ends his post with the […]

I am sick and tired of hearing about “currency war” – and so is Philipp Hildebrand

Milton Friedman used to talk about an interest rate fallacy – that people confuse low interest rates with easy monetary policy. However, I believe that we today are facing an even bigger fallacy – the exchange rate fallacy. The problem is that many commentators, journalists, economists and policy makers think that exchange rate movements in […]

Don’t ever tell me again that monetary policy does not work! Chuck Norris visits Japan

I continue to be completely puzzled that somebody would think that central banks somehow have run out of ammunition and that monetary policy is impotent. The developments in the global financial markets since August-September last year clearly tell you that monetary policy is extremely potent – also when interest rates are at the Zero Lower […]