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No 'General Theory' should ignore the monetary policy rule

No 'General Theory' should ignore the monetary policy rule

John Maynard Keynes famously titled his magnus opus from 1936 The General Theory of Employment, Interest and Money. However, General Theory, as it is generally known, is nothing of the kind. It is not a General Theory of macroeconomics – rather it is a specific theory of macroeconomics making very specific assumptions about the workings of the economy and I will argue here that Keynes made very specific assumptions particularly about the monetary policy regime or rule under which the economy operates.

Sam Bowman calls for nominal spending targeting in the euro zone

Sam Bowman calls for nominal spending targeting in the euro zone

My friend Sam Bowman, Research Director at the Adam Smith Institute, has written a letter to the Financial Times calling for the introduction of a nominal spending target in the euro zone. This is from Sam's letter:

The Casselian-Mundelian view: An overvalued dollar caused the Great Recession

The Casselian-Mundelian view: An overvalued dollar caused the Great Recession

This is CNBC's legendary Larry Kudlow in a comment to my previous post:

The "there was no bubble" reading list

The "there was no bubble" reading list

The "normal" story of the Great Recession is that the crisis was caused by the bursting of a giant property market bubble in the US and other places. The normal story is an odd synthesis between a old-school Keynesian animal spirits story and a vulgar version of Austrian business cycle theory.

A dollar-based Free Banking system: The way to nominal stability in Argentina

A dollar-based Free Banking system: The way to nominal stability in Argentina

Inflation is skyrocketing in Argentina and the country seems unable to ever maintaining any form of nominal stability. In my view the problem with lack of nominal stability in Argentina is, however, not fundamentally monetary - it is rather a constitutional problem. Hence, it seems like the country's politicians are able to make the decisions that are necessary to maintain monetary stability.

I simply have to read Adam Tooze's new book

I simply have to read Adam Tooze's new book

Adam Tooze is one of my favorite historians and I have often written about his fantastic book Wages of Destruction. It is an amazing book about the Nazi time German economy, which I strongly recommend to anybody who cares about listening to me.

One step closer to euro zone deflation

One step closer to euro zone deflation

This is from CNBC:

The Kuroda boom remains all about domestic demand

The Kuroda boom remains all about domestic demand

Remember when then Bank of Japan last year initiated its unprecedented program of monetary easing most commentators saw that as an attempt to wage currency war to boost Japanese exports? I instead stressed that the "export channel" was not likely to be what would drag Japan out of the deflationary trap. Rather I stressed the importance of domestic demand.

A textbook graph that even Augusto Costa and Cristina Kirchner should be able to understand

A textbook graph that even Augusto Costa and Cristina Kirchner should be able to understand

Argentina is an economic basket case. It is that simple. The country never seems to be able to emerge from its problems. The key reason is that the country is extremely weak constitutionally and institutionally and as a result the country has some of the worst policy makers in Latin America (if not in the world).

The "Weidmann rule" and the asymmetrical budget multiplier (is the euro zone 50% keynesian?)

The "Weidmann rule" and the asymmetrical budget multiplier (is the euro zone 50% keynesian?)

During Christmas and New Years I have been able to (nearly) not think about monetary policy and economics, but I nonetheless came across some comments from Bundesbank chief Jens Weidmann from last week, which made me think about the connection between monetary policy rules and fiscal austerity in the euro zone. I will try address these issues in this post.  

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