ALL BLOG POSTS
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.
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.
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.
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:
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.
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.
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.