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Monetary and fiscal reform (thread)
1) what ‘secular stagnation’ ignores is that monetary policy didn’t work well when interest rates were a lot higher.
2) And neither has fiscal policy worked well. Because we have continued to have recessions, including an obvious bad one.
3) The challenge for policy econs is to improve fiscal and monetary policy.
4) The best policies are a) not obviously partisan, b) simple, c) highly effective d) likely to be popular.
5) @Claudia_Sahm’s proposal is the best (only) improvement I’ve seen to fiscal auto-stabilisers. Econs, the world over, back it. It’s a no brainier and fulfils 4). hamiltonproject.org/assets/files/S…
6) In jurisdictions where the fiscal authorities can’t/won’t do it. Central banks should, as @sjwrenlewis @MkBlyth myself and @Frances_Coppola and @ProfSteveKeen and many others have argued theguardian.com/business/econo…
7) Monetary policy works. It requires dual interest rates and targeted lending. @economistmeg & I have explained how it works. And China did it, to huge cyclical success post GFC philosophyofmoney.net/dual-interest-…
8) How should we ‘target’ CB lending? Independent CB determines quantity, price, term. Government specifies use. And everyone should back the obvious use - financing a Green New Deal.
9) Econs, lets add some value. Existing monetary and fiscal policies have failed us. We need simple, effective institutional reform which is not partisan and works. We have the ideas. Time to implement. @MESandbu
