What is Wrong with our Monetary Policy?Center for Financial Stability (2016)
Former Chief of the SDR Division at the IMF Warren Coats unpacks a statement by Senator Jeff Merkley that
"The Fed should be using its economic expertise to highlight the long-term devastating impacts of failing to provide the opportunity for the skills needed for the economy of the future." 
Warren's paper examines monetary management in the United States - since the Nixon shock of closing the gold window and launching wage and price controls - to research the statement above. He finds:
- No tradeoff exists between employment and inflation in the long run.
- Radical innovations in New Zealand sparked rules that ultimately fell short of expectations.
- NGDP targeting ignores the benefits of stable money.
- The return to a hard anchor for monetary policy - such as the SDR - is attractive.
Although CFS is not promoting the idea of a newfound use for the SDR, monetary policy is in need of a rethink. Warren's ideas are thoughtful and informative.
To view the full paper:
As always, CFS welcomes opinion.
- Monetary policy,
- quantitative easing,
- inflation targeting,
- policy interest rate,
- hard anchor
Publication DateOctober 5, 2016
Citation InformationWarren Coats. "What is Wrong with our Monetary Policy?" Center for Financial Stability (2016)
Available at: http://works.bepress.com/warren_coats/37/
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