Redesigning monetary policy
We need a modern monetary policy (MMP). Policy needs redesigning for three fundamental reasons:
Firstly, the mental models for thinking about how the macro-economy in the developed world works have been brok...
Stock prices & r*
Economists pay insufficient attention to asset prices. Ask most economists what the relevance of the bond equity correlation is for fiscal policy and they will be baffled. You’ll be lucky if they know what you’...
The ethics of a Brexit referendum
The debate over Brexit has been dominated by propaganda. To date, I have had sympathy with the one ethical argument, which has been made most effectively by Mehreen Khan, for leaving the EU. It is shared by man...
Draghi’s law of conditional safety
Understanding the Eurozone
The fundamental macroeconomic policy challenge faced by the Eurozone is how to have a risk free asset - which is essential to the functioning of a modern financial system - while sim...
More on post-interest rate monetary policy
Accounting objections to cash transfers don’t add up, and if CBs bought equity they could reduce inequality
There is growing recognition - most recently by Janet Yellen - that should another recession strike...
Functional finance and fiscal rules – a synthesis (Part II)
Introduction
A curious argument has broken out over the Labour’s proposed fiscal rule. Some advocates of functional finance, in particular, have been vociferous in their criticisms. There is scope for a consid...
MMT and fiscal rules (part I) – a prologue
When I explained the essential tenets of Modern Monetary Theory (MMT) to Ben Bernanke, over dinner in Washington, he replied somewhat quizzically, “Isn’t that just economics?” In fact, on the accounting treatme...
Why is universalism losing?
There is a tension in all enlightened ‘identity politics’. How do we combat discrimination without accepting the premise that there is significant difference? And how do we promote universalism without denying ...
Central bank ‘equity’ debunked
The equity of a corporation is the difference between its assets and liabilities. Under typical accounting practice for central banks, transferring cash directly to households would result in a decline in their...
Defining Emerging Markets
Emerging markets are not poor countries, nor are they countries which are making economic progress. They are defined by a very specific set of macroeconomic properties, which financial markets are conscious of,...