Money and monetary policy for the twenty-first century
AbstractThis essay challenges the conventional wisdom about money and monetary policy. The role of money in fostering prosperity is a function of the quality, as well as the quantity, of money. Inflation always harms the performance of an economy. Deflations caused by productivity and innovation can be virtuous. A definition of a non-inflationary environment is set forth. Rapid real growth and low unemployment cannot cause inflation. There is no trade-off between inflation and employment. Higher commodity prices or "weak" exchange rates cannot cause inflation. High market interest rates are a symptom of inflationary policies. Low interest rates are a reflection of successful anti-inflationary policies, not "easy money."
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Bibliographic InfoArticle provided by Federal Reserve Bank of St. Louis in its journal Review.
Volume (Year): (2006)
Issue (Month): Nov ()
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- James M. Buchanan, 1994. "Notes on the Liberal Constitution," Cato Journal, Cato Journal, Cato Institute, Cato Journal, Cato Institute, vol. 14(1), pages 1-9, Spring/Su.
- Alchian, Armen A, 1977. "Why Money?," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 9(1), pages 133-40, February.
- Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 25(2), pages 151-62, May.
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