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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.

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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. 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.
    3. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
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