Topic: Monetary Policy

Quotes

Michael Bordo & Anna Schwartz, “Monetary Policy Regimes and Economic Performance” (1999)

By limiting the lender of last resort to rediscounting only such paper as arose from “actual commercial transactions” as opposed to paper arising from “speculative transactions” (i.e., loans backed by stock market collateral), the Federal Reserve Act sustained the real bills doctrine but, in so doing, it confused the elasticity of one component of the money stock relative to another and the elasticity of the total.#
The cooperation that did occur [during the classical gold standard] was episodic, ad hoc, and not an integral part of the operation of the gold standard. Of greater importance is that, during periods of financial crisis, private capital flows aided the Bank. Such stabilizing capital movements likely reflected market participants’ belief in the credibility of England’s commitment to convertibility.#

Posts

Finance in a Theory of Money
Orthodox monetary theory is kneecapped by an overly concrete conception of money, which has led in recent decades to a reaction of moneyless models of monetary policy. By contrast, this paper generalizes monetary theory in terms of the plans of economic agents to hold and dispose of liquidity in a . . .
2022 Inflation Explainer
Inflation in the United States is at about 7%. How did it get there? What does this mean for our economy and our wallets?
Bubbles and Broad Monetary Aggregates: Toward a Consensus Approach to Business Cycles
A challenge for quantity-theoretic explanations of business cycles is that recessions manifest despite central banks’ scrupulousness to avoid falls in monetary aggregates, a fact which would seem to indicate a structural explanation. This paper argues that a broader and theoretically richer Divisia aggregate – which reflects changes in financial market . . .
What's Radical about MMT? An Attempt to Pin Down MMT on Public Finance
People from Scott Sumner to Paul Krugman have complained that MMT is hard to argue against because it’s hard to say what the argument even is. Much of the discussion has been a proxy for policy disagreement. So without any claim to originality, I’m going to attempt to break down . . .
Cryptocurrency and the Problem of Intermediation
The volatility of Bitcoin has caused many to dismiss its potential. Bitcoin is, however, very similar to another money commodity with an essentially rigid supply that saw much greater historical success: gold. The paper considers the factors that allowed currencies on the gold standard to adjust their short-run nominal supply . . .
Helicopters and the Neutrality of Money
Models of monetary expansion, following Friedman (1969), tend to abstract away from the relative price effects of monetary policy by assuming that the central bank distributes money directly to agents via helicopter. However, in light of the recent entertainment of helicopter drops as a potential monetary policy tool, this paper . . .