Modern Central Banks Only Have Real Effects?
This paper surveys the wreckage of modern monetary theory and policy which follow from the disappearance of the modern quantity theory of money, and its empirical counterpart, the modern stock of fiat money.2 In order of significance, the consequences are (1) the disappearance of any optimum money supply policies, (2) vanishing internally consistent costs of inflation and (3) the theoretical revitalization of Keynesian economics stemming from recognition that the common impression Keynes was guilty of theoretical error is not correcting economies where ‘money’ plays a real role.
|Date of creation:||20 Oct 2004|
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|Publication status:||Published: Carleton Economic Papers|
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- Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
- David Longworth, 2003. "Money in the Bank (of Canada)," Technical Reports 93, Bank of Canada.
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