Escaping the zero lower bound: edge share.

Having already written on this subject, I post here today another take on the issue of the current conundrums about Monetary Policy. The quest between Inflation targeting – if the target should be raised above the 2% consensus – is again brought to the front line of discussion. This Blog longandvariable defends here a position of criticism (rightly so…) about the today’s feasibility of Electronic money and its potential of resolving the issue of zero lower bound in Monetary Economics. The last paragraph is worth a recall:

What Rogoff thinks would particularly ‘baffle’ central bankers’ constituents was that they had changed their minds about the benefits of price stability.  There’s something in this.  But it should not be the overriding concern.    And:  the profession has done a lot of changing of minds recently!  We would hardly decide against tightening prudential supervisory standards on the grounds that we would baffle everyone that we had changed our minds on it.  On the contrary, it would be perplexing if the authorities had not changed their minds in the light of the evidence about what constituted good policy.  So too with inflation.  For generations, the authorities wrestled with different metallic standards for monetary policy.  Finally, we ‘changed our minds’ about this being the right thing to do.  It was probably baffling at the beginning.  But slowly people got used to the meaninglessness of the ‘promise to pay the bearer on demand the sum of’ text.”

Escaping the zero lower bound: electronic money, or higher inflation?.

via Escaping the zero lower bound: electronic money, or higher inflation?.


On the lack of ECB policy debate culture

The link below is from the excellent blog on the ECB: ECB watchers. Instructive reading about the European Central Bank, and is also a response to Paul Krugman about his opinions on the split inside the European finance behemoth about economic policy culture. What I find most revealing is the view about the real lack of a culture of debate and free inquiry on economic policy inside the ECB, and exactly when maybe it needed it most. A must read.

And also to reflect, specially those that are more directly affected by economic policy by the Central Bank: the Eurozone periphery!

PREs, VSPs and the ECB: a response to Paul Krugman.

via On the lack of ECB policy debate culture.