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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.
Here is Alan Blinder in a paper - "Issues in the Coordination of Monetary and Fiscal Policy" - from 1982:
One of the hottest political topics in the US today is the so-called fiscal cliff. The fiscal cliff is the expected significant fiscal tightening, which will kick in January 2013 when the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 expires - unless a deal is struck to postpone the tightening. The fiscal cliff is estimated to amount to 4% of GDP - hence a very substantial fiscal tightening.
The Independent Institute is out with a new book edited by our own David Beckworth: Boom and Bust Banking: The Causes and Cures of the Great Recession. David of course is one of the founding father of Market Monetarism and despite the somewhat Austrian sounding title of the book the book is primarily written from a Market Monetarist perspective.