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When the eurocrat Mario Monti became Prime Minister last year we were told that he was the man to turn around the Italian economy. We were told that technocrats would do the job rotten and incompetent politicians were not able to do. However, the eurocrat Papademos did not last long in Greece and now Mario Monti is beginning to sound rather desperate. On Thursday he told reporters that EU policy makers had one week to save the euro. That is somewhat of a stern warning from somebody who is supposed to be a cool-headed technocrat.
I have always said that my blog should be open to debate and I am happy to have guest posts from clever and inlighted economists (and non-economists) about monetary matters. I am therefore delighted that my good friend and colleague Jens Pedersen (I used to be his boss...) has offered to write a reply to "Integral's" post on price level targeting versus NGDP level targeting. Jens who recently graduated from University of Copenhagen. His master thesis was about Price Level Targeting.
Guest post: Measuring the stance of monetary policy through NGDP and Prices
By chance I today found an ECB working paper from 2004 - "The Great Depression and the Friedman-Schwartz hypothesis" by Christiano, Motto and Rostagno.
It is very easy to get frustrated about the discussion of monetary policy in today’s world. However, this morning we got something to cheer about as Vince Cable British Minister for Business, Innovation and Skills gave a speech on the UK recovery in the 1930s and the parallels to today’s crisis at the think tank Centre Forum. The entire speech is very uplifting.
Our good friend and die hard British market monetarist Britmouse has a new post on his excellent blog Uneconomical. I think it might just be the coolest idea of the year. Here is Britmouse:
It is no secret that I have been fascinated by some of Havard professor Jeff Frankel's ideas especially his idea for Emerging Markets commodity exporters to peg the currency to the price of their main export (PEP). I have written numerous posts on this (see below) However, Frankel is also a long-time supporter of NGDP target and now he has restated is his views on NGDP targeting.
Speculation about a Greek exit for the euro zone continues ahead of the weekend's Greek parliament elections. If Greece leaves the euro (or is kicked out) then it will not be the first time Greece has been forced out of a currency union.
As the euro crisis continues speculation of an eventual break-up of the euro also continues. There are numerous examples in monetary history of currency unions breaking up. One is the breakup of the Scandinavian Currency Union in 1924.