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Conference Paper
The housing finance revolution: commentary
Working Paper
Is monetary policy a science? the interaction of theory and practice over the last 50 years
In recent decades, the declarations of ?independent? central banks and the conduct of monetary policy have been assigned an ever increasing role in the pursuit of economic and financial stability. This is curious since there is, in practice, no body of scientific knowledge (evidence based beliefs) solid enough to have ensured agreement among central banks on the best way to conduct monetary policy. Moreover, beliefs pertaining to every aspect of monetary policy have also changed markedly and repeatedly. This paper documents how the objectives of monetary policy, the optimal exchange rate ...
Working Paper
Ultra easy monetary policy and the law of unintended consequences
In this paper, an attempt is made to evaluate the desirability of ultra easy monetary policy by weighing up the balance of the desirable short run effects and the undesirable longer run effects?the unintended consequences. The conclusion is that there are limits to what central banks can do. One reason for believing this is that monetary stimulus, operating through traditional ("flow") channels, might now be less effective in stimulating aggregate demand than previously. Further, cumulative ("stock") effects provide negative feedback mechanisms that over time also weaken both supply and ...
Working Paper
Some alternative perspectives on macroeconomic theory and some policy implications
The macroeconomic theories and models favoured by academics, as well as those used more commonly by policymakers, effectively rule out by assumption economic and financial crises of the sort we are living through. In particular, the longer run dangers posed by the rapid expansion of credit and resulting private sector balance sheet developments were inadequately appreciated. As a result, the current crisis was neither anticipated nor prepared for, and the crisis was also less well managed than it might have been. At the level of macroeconomic theory and modelling, this experience suggests ...
Conference Paper
Commentary: after the fall
Working Paper
Should monetary policy \"lean or clean\"?
It has been contended by many in the central banking community that monetary policy would not be effective in "leaning" against the upswing of a credit cycle (the boom) but that lower interest rates would be effective in "cleaning" up (the bust) afterwards. In this paper, these two propositions (can't lean, but can clean) are examined and found seriously deficient. In particular, it is contended in this paper that monetary policies designed solely to deal with short term problems of insufficient demand could make medium term problems worse by encouraging a buildup of debt that cannot be ...
Working Paper
How false beliefs about exchange rate systems threaten global growth and the existence of the Eurozone
The current belief system that says ?all will be well? if domestic price stability can be maintained is fundamentally flawed. If this can be achieved only through monetary, credit and debt expansion, the end result will be an increased risk of systemic crisis. Moreover, false beliefs about how exchange rate systems function, at both the global level and within the Eurozone, imply international ?spillover? effects that increase both the likelihood and the seriousness of such crises. Gross international capital flows pose as many (perhaps more) dangers than do net flows (ie current account ...