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The Post Keynesian alternative to inflation targeting

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Author Info

  • Angel Asensio

    (CEPN, University of Paris 13.)

  • Mark (M.G.) Hayes

    (Homerton College, Cambridge.)

Abstract

While mainstream policies may be beyond improvement in the enchanted ›optimizable‹ world, Post Keynesians have to manage without a magic wand in our uncertain world. We discuss the alternative policies proposed in the recent Post Keynesian literature and argue that control of interest rates is too imperfect for such policies to be feasible in general, although they provide useful guidelines and may be successful in favourable circumstances. Consequently, the question of credibility is irrelevant, if this means whether policy-makers will honour their commitment to an unfeasible ideal target. The right question is whether policy is convincing enough to make the conventional state of expectation (and the related interest rate) consistent with full employment. It is all a matter of confidence. The basic principles involved in such an approach to monetary policy are discussed.

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File URL: http://www.elgaronline.com/view/journals/ejeep/6-1/ejeep.2009.01.08.xml
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Bibliographic Info

Article provided by Edward Elgar in its journal Intervention. European Journal of Economics and Economic Policies (subtitle initially: Zeitschrift fuer Oekonomie / Journal of Economics).

Volume (Year): 6 (2009)
Issue (Month): 1 ()
Pages: 65-79

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Handle: RePEc:elg:ejeepi:v:6:y:2009:i:1:p:65-79

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Web page: http://www.elgaronline.com/ejeep

Related research

Keywords: interest rate rule; convention; uncertainty; monetary policy;

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Cited by:
  1. Hein, Eckhard & Schoder, Christian, 2009. "Interest rates, distribution and capital accumulation: A Post-Kaleckian perspective on the US and Germany," IPE Working Papers 04/2009, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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