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Modern Central Banks Only Have Real Effects?

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Abstract

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.

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  • T.K. Rymes, 2004. "Modern Central Banks Only Have Real Effects?," Carleton Economic Papers 04-14, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:04-14
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    1. David Longworth, 2003. "Money in the Bank (of Canada)," Technical Reports 93, Bank of Canada.
    2. Woodford, Michael, 1990. "The optimum quantity of money," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 20, pages 1067-1152, Elsevier.
    3. T.K. Rymes & Colin Rogers, 1995. "Keynes' Monetary Theory of Value and Modern Banking," Carleton Economic Papers 95-11, Carleton University, Department of Economics, revised 1997.
    4. McCallum, Bennett T, 1987. "The Development of Keynesian Macroeconomics," American Economic Review, American Economic Association, vol. 77(2), pages 125-129, May.
    5. Coates,John, 1996. "The Claims of Common Sense," Cambridge Books, Cambridge University Press, number 9780521412568, November.
    6. C. A. E. Goodhart, 1995. "Money Supply Control: Base or Interest Rates? (1995)," Palgrave Macmillan Books, in: The Central Bank and the Financial System, chapter 13, pages 249-262, Palgrave Macmillan.
    7. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
    8. Kevin Clinton, 1997. "Implementation of Monetary Policy in a Regime with Zero Reserve Requirements," Staff Working Papers 97-8, Bank of Canada.
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