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"Conditionality" is ECB's term for the Sumner Critique

"Conditionality" is ECB's term for the Sumner Critique

Some time ago Scott Sumner did a number of blog posts on fiscal policy and why he believes that the budget multiplier is zero. At the time I was somewhat frustrated that the amount of time Scott was using to focus on an issue that I found quite obvious. However, I now found myself doing exactly the same thing - I can't let go of the game played by central banks against governments and impact this has on the economic policy mix. This is maybe because I find empirical evidence for the so-called Sumner Critique popping up everywhere.

David Laidler: "Two Crises, Two Ideas and One Question"

David Laidler: "Two Crises, Two Ideas and One Question"

The main founding fathers of monetarism to me always was Milton Friedman, Anna Schwartz, Karl Brunner, Allan Meltzer and David Laidler. The three first have all now passed away and Allan Meltzer to some extent seems to have abandoned monetarism. However, David Laidler is still going strong and maintains his monetarist views. David has just published a new and very interesting paper - "Two Crises, Two Ideas and One Question" - in which he compares the Great Depression and the Great Recession through the lens of history of economic thought.

MRUniversity - join now!

MRUniversity - join now!

Tyler Cowen and Alex Tabarrok have written one of the best economics textbooks out there and now they are introducing the Marginal Revolution University.

Help me locate the ECB's "monetary pillar"

Help me locate the ECB's "monetary pillar"

I am still in Russia and do not have much time to blog, but something have been on my mind in the last couple if days. Where did the ECB's monetary pillar go? In the "old days" the ECB was hugely focused on what was happening to M3 growth. The ECB would talk about it reference value for M3 growth and it would analyse both the nominal and the real "money gap" to assess future inflationary (or deflationary) pressures. This of course to a large extent was the "darling" of then ECB chief economist Otmar Issing. However, Issing is no longer with the ECB and apparently monetary analysis has disappeared from the ECB with him - at least gradually.

"Synthesizing State and Spontaneous Order Theories of Money"

"Synthesizing State and Spontaneous Order Theories of Money"

I have long been impressed with the young guard at George Mason University. Now two of them - Alex Salter and Will Luther - is out with a new Working Paper - "Synthesizing State and Spontaneous Order Theories of Money". It is very interesting stuff and I highly recommend it to anyone who is interested in monetary theory. Here is the abstract:

Woodford on NGDP targeting and Friedman

Woodford on NGDP targeting and Friedman

Michael Woodford's Jackson Hole paper is a goldmine. I haven't read all of it, but I just want to share this quote:

Michael Woodford endorses NGDP level targeting
Causality, econometrics and beautiful Saint Pete

Causality, econometrics and beautiful Saint Pete

I am going to Russia next week. It will be good to be back in wonderful Saint Petersburg. In connection with my trip I have been working on some econometric models for Russia. It is not exactly work that I enjoy and I am deeply skeptical about how much we can learn from econometric studies. That said, econometrics can be useful when doing practical economics - such as trying to forecast Russian growth and inflation.

In New Zealand the Sumner Critique is official policy

In New Zealand the Sumner Critique is official policy

We have family from New Zealand visiting us in Denmark these days so I have been paying a bit more attention to the Kiwi economy than I normally would - and particularly to Kiwi monetary policy.

Greece is not really worse than Germany (if you adjust for lack of growth)

Greece is not really worse than Germany (if you adjust for lack of growth)

Market Monetarists have stressed it again and again - the European crisis is primarily a monetary crisis rather than a financial crisis and a debt crisis. Tight monetary conditions is reason for the so-called debt crisis. Said in another way it is the collapse in nominal GDP relative to the pre-crisis trend that have caused European debt ratios to skyrocket in the last four years.

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