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The Bernanke rule looks like a Evans rule

The Bernanke rule looks like a Evans rule

We nearly got what Market Monetarists have been asking for - the Federal Reserve now have a relatively clear defined target and it will implement it through changes to the money base (by buying Mortgage backed securities). It is not a NGDP level target, but probably more a light version of the Mankiw rule or the so-called Evans rule.

I think Ben just did it...

I think Ben just did it...

This is what I in a post earlier today asked the Federal Reserve to do:

Time to end discretionary monetary policy!

Time to end discretionary monetary policy!

This week has been nearly 100% about monetary policy in the financial markets and in the international financial media. In fact since 2008 monetary policy has been the main driver of prices in basically all asset classes. In the markets the main job of investors is to guess what the ECB or the Federal Reserve will do next. However, the problem is that there is tremendous uncertainty about what the central banks will do and this uncertainty is multi-dimensional. Hence, the question is not only whether XYZ central bank will ease monetary policy or not, but also about how it will do it.

Steve, George and Bryan debate Austrian economics and empirics

Steve, George and Bryan debate Austrian economics and empirics

I am a huge fan of Cato-Unbound.org. Here you find good insightful and intellectual debates amount classical liberal, libertarian and conservative scholars on a number of topics. The quality of the pieces on Cato Unbound is always very high. That is also the case for the latest "debate". As always there is a "Lead Essay" and a number of "Response Essays". This time the topic is "Theory and Practice in the Austrian School".

"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:

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