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I have recently been giving a lot of attention to the work of David Eagle and his Arrow-Debreu based analysis of monetary policy rules. This is because I think David's work provides a microfoundation for Market Monetarism and adds new dimensions to the discussion about NGDP targeting - particularly in regard to financial stability.
It’s Sunday night in Copenhagen and I have just returned from a trip to Dubai. I should really write a long post about Dubai, but I will keep it short.
I found yet another gold nugget in David Eagle’s research:
Imagine you are ”born” as a macroeconomists in the US or Europe around 1990. You are told that you are not allowed to study history and all you your thinking should be based on (apparent) correlations you observe from now on and going forward. What would you then think of the world?
I don't know the answer to the the question in the headline, but here is from the Financial Times:
A couple ofweeks ago I visited Lithuania and around a month ago I was in Ireland. Both countries have been through boom and bust and both countries are still not out of the crisis. Tomorrow I fly to another crisis hit place - Dubai. This has reminded me about an issue that have been on mind my mind for some time. Can national stereotyping explain why countries are hit by crisis? My clear answer is no and that should be the answer of most intelligent people. However, surprisingly often both mainstream media and many economists would hint (or say directly) that national characteristics can explain why X or Z country has been hit by crisis.
Over the last couple of days I have done a couple of posts on the work of David Eagle (and Dale Domian). I guess that there still are a few posts that could be written on this topic. This is the next one.
THIS IS A GUEST POST By Arash Molavi Vasséi
I am continuing my mini-review of the research done by Dale Domian and David Eagle. The next paper in the “series” is a truly excellent paper on an empirical investigation of the impact of different monetary policy targets (inflation targeting, Price Level Targeting and Nominal Income Targeting) on the speed of recovery in the US economy.