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Should the Implementation of Monetary Policy Be Subject to Rules?

In: Debates in Monetary Macroeconomics

Author

Listed:
  • Martin Watts

    (The University of Newcastle)

  • George Pantelopoulos

    (The University of Newcastle)

Abstract

In this chapter, the authors adopt a Modern Monetary Theory lens and argue that the setting of interest rates should be subject to rules, such as a target policy rate, as opposed to central bank discretion. A number of theoretical arguments are advanced as to why reliance on monetary policy to achieve full employment and price stability is ill-advised. Thus monetary policy would need to be complemented by the fiscal policy which has stronger and more predictable short-term effects on the macroeconomy. The authors advocate a job guarantee, along with infrastructure spending, which address the challenges associated with achieving and maintaining full employment and price stability.

Suggested Citation

  • Martin Watts & George Pantelopoulos, 2022. "Should the Implementation of Monetary Policy Be Subject to Rules?," Springer Books, in: Steven Pressman & John Smithin (ed.), Debates in Monetary Macroeconomics, chapter 0, pages 23-45, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-11240-9_2
    DOI: 10.1007/978-3-031-11240-9_2
    as

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