There is some commentary emerging that is finally starting to question the reliance on monetary policy (setting interest rates) as the primary macroeconomic policy tool with fiscal policy forced into a passive role. In Australia, this debate has intensified in the last week following the hubris from the new Reserve Bank governor, who thinks her role is to sound like a ‘tough guy’ dishing out threats of ever increasing interest rate rises even as inflation falls. There was an Op Ed in the Sydney Morning Herald today (August 12, 2024) – Maybe only a recession will fix macroeconomic management – by the Economics Editor Ross Gittins, which challenges the current macroeconomic consensus. Some of this argument is acceptable. But when he advances his alternative proposal of “a new independent authority” to set monetary and fiscal policy, the reality is that this would be as bad as we have now. More on that later....
William Mitchell — Modern Monetary Theory
Major macroeconomic policy reform is needed to reduce the reliance on monetary policyBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
3 comments:
Never going to happen. Politicians don't want the responsibility. They don't want to be bothered. And if things go wrong they can always shift blame to the central bank.
Mike's right
https://www.spiked-online.com/2024/08/14/starmer-will-let-the-blob-take-over-britain/
Unelected, technocratic, New-Classical-New-Keynesian DSGE models and its rational expectations and representative agent microfoundations fiscal councils are next.
↓
https://mainlymacro.blogspot.com/2024/07/more-power-to-obr.html
Forward into the past.
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