John Maynard Keynes once marveled at "how, starting with a mistake, a remorseless logician can end up in Bedlam." (Bedlam was the nickname of a London madhouse.) Keynesian or New Keynesian macroeconomists who start with the mistaken premise that a central bank cannot fight recession except by lowering…
Kenneth S. Rogoff stands out as the advocate of restricting hand-to-hand currency who has argued the case most comprehensively and probably the most cautiously. I critically reviewed his recent book, The Curse of Cash, in the May 2017 issue of Econ Journal Watch. Here I summarize highlights…
I chose my title carefully. I will focus on what is possible for the U.S. central bank to achieve rather than what they might want to accomplish or may attempt to effect. I examine three possible senses in which the Federal Reserve could not raise interest rates,…
Lately, there have been a lot of discussions in the media and in the academic sphere surrounding banks' net interest margin in the low (or negative) interest rate environment. I have explained before how lowering interest rates below a certain threshold led to "margin compression" (see here), which…
"Helicopter money" started out as, and long remained, nothing more than a heuristic device — and a brazenly counterfactual one at that — employed by monetary economists as a means for gaining a better theoretical understanding of the consequences of changes in the stock of money. "Suppose,"…