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Scott Sumner and other Market Monetarists forcefully argue that monetary policy can and should be used to return nominal GDP (NGDP) to it's pre-crisis growth path. In the US that is around 5% yearly NGDP growth from a level 12-14% above the present level.
Since the outbreak of the Great Recession a new economic school has emerged basically as a result of blogging on the internet. I have in a recent working paper termed this school Market Monetarism. The purpose of this blog is to follow the theoretical and empirical development of Market Monetarism as well as hopefully contribute to the development of the school.
This is ECB-chief Mario Draghi in an interview today with Bloomberg:
For somewhat more than a decade I have regularly been watch monetary policy decision from different central banks around the world. Most 'modern' central banks in the world announces changes to monetary policy once around. Mostly these events are pretty much none-events - the central banks do not surprise markets much. However, over the last fives years it has certainly been harder to predict the outcome of these meetings compared to how relatively easy it in the decade before the crisis.
My employer Danske Bank has a branch in Northern Ireland. The bank used to be named Northern Bank. However, recently the name has been changed to Danske Bank. As a number of commercial banks in Northern Ireland are issuing their own bank notes (or rather pound notes with their on logo on) it will soon be possible pay your bills with Danske Bank bank notes in Northern Ireland.
The couple of days have brought a number of data releases that indicate that a recovery is underway in the British economy. This is from the Telegraph today:
This is Italian central bank governor Ignazio Visco in an interview with Bloomberg:
Over the past three days Bob Hetzel has given a number of lectures in Copenhagen and I am happy to say that I have participated in all of the seminars and lectures. Not surprisingly Bob and I agree 90% (at least) on monetary theory, however, I have also become more aware of one of the major difference between traditional monetarism and Market Monetarism.
During the 1970s a key debate keynesians and monetarists was about the causality in macroeconomic models or more specifically about whether changes in the money supply caused changes in nominal spending or whether nominal spending changed caused changes in the money supply. Both sides of the argument produced endless numbers of econometric studies to show that they were right. This together equally large amount of studies of the interest rate elasticity of money demand got to be the biggest waste of time in the history of the economic profession.