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(Post) Keynesian alternative to inflation targeting

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Author Info
Angel Asensio () (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII)
Abstract

While the mainstream policies can not be surpassed in the enchanted ‘optimizable’world, (Post) Keynesians have to resign themselves to manage without magic wand inthe uncertain real world. The paper discusses the monetary rules proposed in the recentPost Keynesian literature. It argues that the long-term interest rate is too imperfectlycontrolled for such rules being feasible. Consequently, the quest for credibility isirrelevant, for it makes not much sense to wonder whether authorities will honour theircommitment on an unfeasible ideal target. The right question is whether authoritiespursue convincing objectives so as to move the conventional expectation of the future(and the related interest rate) towards full employment. It is a matter of confidence.The basic principles involved in such an approach to economic policy are discussed.

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Paper provided by HAL in its series Post-Print with number halshs-00335560_v1.

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Date of creation: 04 Apr 2008
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Publication status: Published - Presented, Inflation targeting, is there a credible alternative? Organized by the PostKeynesian Study Group, Balliol College., 2008, Oxford, United Kingdom
Handle: RePEc:hal:journl:halshs-00335560_v1

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Keywords: Interest rate rule; Inflation targeting; PostKeynesian; Monetary policy;

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    Other versions:
  4. Geoff Tily, 2006. "Keynes's theory of liquidity preference and his debt management and monetary policies," Cambridge Journal of Economics, Oxford University Press, vol. 30(5), pages 657-670, September. [Downloadable!] (restricted)
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    Other versions:
  7. H. Sonmez Atesoglu, 2007. "The neutral rate of interest and a new monetary policy rule," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(4), pages 689-697, July. [Downloadable!] (restricted)
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  11. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March. [Downloadable!] (restricted)
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  13. Thomas I. Palley, 2007. "Macroeconomics and monetary policy: competing theoretical frameworks," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(1), pages 61-78, October. [Downloadable!] (restricted)
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  17. Angel Asensio, 2006. "New-Consensus Macroeconomic Governance in a Keynesian world, and the Keynesian alternative," Post-Print halshs-00139113_v1, HAL. [Downloadable!]
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