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Former RBNZ economist Michael Reddell reviews Modern Monetary Theory where fiscal policy is the key lever rather than monetary policy; He argues monetary policy is still best for cyclical stabilisation
Michael Reddell
Monday, July 31, 2017
Former RBNZ economist Michael Reddell reviews Modern Monetary Theory where fiscal policy is the key lever rather than monetary policy; He argues monetary policy is still best for cyclical stabilisation
interest.co.nz
Former RBNZ economist Michael Reddell reviews Modern Monetary Theory where fiscal policy is the key lever rather than monetary policy; He argues monetary policy is still best for cyclical stabilisation
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3 comments:
"Perhaps especially so as (to us) he was talking about policy in Australia and New Zealand, and neither country had a US-style financial crisis."
Because neither of those nations CBs did large scale asset purchases of domestic financial assets thus shutting off bids by banks for risk assets and thus bankrupting their member institutions like the US and many other nations did... which is part of so-called monetary policy btw...
Bill Mitchell has a very different read of the meeting
"He then said (more or less): “Well, it’s a stylisation”.
Me (more or less): “of what? A stylisation of what?”.
Him (more or less): “of banks”.
Me (more or less): “but this stylisation is a fiction. Typically, we would use stylisation to simplify but not obscure reality. If you teach the money multiplier and the internal banking dynamics that underpin it, as if it is a statement of the way the banking system actually works, then you are lying."
It's a conceptual explanation of bank function... not a stylization...
The concept is "banks lend out the deposits..."
You can't teach or train systems science via concepts (or stylization) you have to use deterministic math techniques...
It quickly degrades into "I know you are but what am I?" Type of trading conceptual assertions... you get nowhere ...
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