Debates in Monetary Macroeconomics: Tackling Some Unsettled Questions

Contents
Notes on Contributors
List of Tables
1 Some Unsettled Questions in Monetary Macroeconomics
	1 Introduction
	2 What Are the Questions?
	3 Domestic Economic Policy: Monetary Policy Rules and Budget Deficits
	4 Do Higher Taxes Cause Inflation?
	5 International Issues: Trade Balances and Exchange Rates
	6 Conclusion
	Note
	References
2 Should the Implementation of Monetary Policy Be Subject to Rules?
	1 Introduction
	2 Monetary Policy Dominance
		Conventional Monetary Policy
		(Deep) Negative Interest Rates
	3 Fixed Interest Rates
		A Zero (Nominal) Interest Rate Policy (ZIRP)
		A Constant Low Real Rate of Interest
		Pasinetti’s ‘Fair’ Interest Rate14
		A Comparison of Fixed Interest Rate Policies
		Final Remarks on Fixed Interest Rates
	4 Full Employment
	5 Conclusion
	Notes
	References
3 Rules Are Meant to Be Broken: Arguments in Favour of Discretionary Monetary Policy
	1 Introduction
	2 A Brief Review of Rules versus Discretion in Monetary Policy
		Values Informing Monetary Policy Regimes
		Proposed Objectives of Monetary Policy
		On the Existence of a Natural Rate of Inflation and Unemployment
	3 A Selection of Monetary Policy Rules in Theory
		The Friedman Rule
		The Zero Interest Rate Policy (ZIRP) Rule or the Kansas City Rule
		The Taylor Rule
		The Fair Rate Rule or the Pasinetti Rule
		The Zero Real Policy Rate (ZRPR) Rule or the Smithin Rule
	4 A Critique of Monetary Policy Rules
	5 All Rules Are not Made Equal: Political Economy of Monetary Policy
	6 Conclusion
	References
4 How and When to Balance the Government Budget
	1 Introduction
	2 Ricardian Equivalence
	3 Keynes and the Cyclically Balanced Budget
	4 Modern Monetary Theory
	5 Piketty, Inequality, and Debt
	6 Settling Some Questions About Public Debt
	Notes
	References
5 The National Debt Is Irrelevant: Some Unsettling Questions Regarding Government Budget Deficits
	1 Introduction
	2 The Philosophy of Debt
	3 Ethical Issues
	4 The Psychology of Debt
	5 Functional Finance and MMT
		Keynes
		Functional Finance
		MMT
		Piketty
	6 Does Debt Cause Inflation?
	7 The Political Economy of MMT
	8 Rules
	9 Conclusion
	References
6 What is the Sign of the Balanced Budget Multiplier?
	1 Introduction
	2 Taxes and Inflation
	3 The Balanced Budget Multiplier and the Genesis of ‘Tax and Spend’ Policies
	4 Effective Demand Versus Aggregate Supply
	5 Changes in Government Expenditure and Taxation
		‘Partial Equilibrium’ Versus ‘General Equilibrium’ Analysis
	6 Conclusion
	Notes
	References
7 Taxes Are Deflationary and Can Be Used as a Deflationary Tool
	1 Introduction
	2 Types of Inflation
		Consumer-Price Inflation
		Asset-Price Inflation
		True Inflation
	3 Different Types of Taxes
	4 Taxes Are Deflationary Due to Their Impact on Spending and Wealth
	5 Federal Taxes Are Deflationary Due to Their Impact on Net Wealth
	6 Summary and Conclusion
	References
8 The Ambiguous Effects of Targeting Current Account Surpluses
	1 Introduction
	2 Positive Effects of Trade Surpluses
	3 The Ambiguous Effects of Targeting Trade Surpluses
	4 Conclusion
	References
9 Does a Current-Account Deficit Indicate Bad Economic Policy?
	1 Introduction
	2 Long-Run Living Standards
	3 Long-Run Living Standards in the Presence of Productivity Growth
	4 Equity Considerations Both Within and Across Generations
	5 Short-Run Concerns
	6 Conclusions
	References
10 The Case for Fixed Exchange Rate Regimes: What for and in What Form?
	1 Introduction
	2 Fixed Parities as a Public Good
	3 Do Fixed Exchange Rates Hinder Currency Sovereignty?
	4 The Objective Of International Monetary Coordination
	5 Three Proposals to Make Fixed Exchange Rates Sustainable
		Currency Boards or Dollarisation (or Unilateral Euroisation)
		Introduction of Capital Controls on Short-Term Capital Flows
		Establishment of a Clearing Union and an International Investment Council
	6 Concluding Remarks
	Notes
	References
11 In Defence of Flexible Exchange Rates in a Small Open Capitalist Economy
	1 Introduction
	2 Time Preference and Exchange Rates
	3 What Does Interest Parity Teach Us?
	4 What About Economic Stability?
	5 The Tobin Effect
	6 The Tobin Effect in an Individual Economy
	7 The Tobin Effect in a SOE with Flexible Exchange Rates
	8 What Does MMT Imply for the SOE with Flexible Exchange Rates?
	9 Conclusions
	Notes
	References
Index