ALL BLOG POSTS
The IS/LM model is standard macro textbook stuff. Unfortunately the model is highly problematic and even worse it seems like the IS/LM model (in its most simple form) is the only model that certain policy makers understand. Recently a debate about the IS/LM model has been flaring up.
My post on Bob Murphy's critique of Market Monetarism has triggered a slight discussion about Austrian economics.
In the 1990s two Federal Reserve officials Robert E. Keleher and Manuel H. "Manley" Johnson came close to starting a Market Monetarist revolution. Johnson and Keleher pioneered what they termed a “Market Price Approach to Monetary Policy”. This approach is essentially Market Monetarism. I have in earlier posts highlighted their book on the subject from 1996, but they also wrote a number of papers during the 1990s that explained their approach.
Obviously anybody interested in monetary theory and monetary history should read Milton Friedman's and Anna Schwartz's great book "A Monetary History of the United States, 1867-1960", but you could also have a look at the youtube version of the story.
The Market Monetarist school has emerged in the blogosphere as a clear competitor to mainstream Keynesians as well as to the Austrian school thinking. However, Market Monetarists have really not been very clear about their intellectual heritage.
The euro crisis continues, but the issues are not new. Already back in 2001 two of the most influential monetary economists ever debated the euro issue – and the question of fixed versus floating exchange rates. Milton Friedman represented the euro sceptic view, while Robert Mundell represented the pro euro view.