Monetary theory and policy: the debate revisited

Jean-Luc Gaffard

No 2018-40, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: This paper is aimed at revisiting monetary analysis in order to better understand erroneous choices in the conduct of monetary policy. According to the prevailing consensus, the market economy is intrinsically stable and is upset only by poor behaviour by government or the banking system. We maintain on the contrary that the economy is unstable and that achieving stability requires a discretionary economic policy. This position relies upon an analytical approach in which monetary and financial organisations are devices that help markets to function. In this perspective, which focuses on the heterogeneity of markets and agents, and, consequently, on the role of institutions in determining overall performance, it turns out that nominal rigidities and financial commitment offer the means to achieve economic stability. This is because they preventsuccessive, unavoidable disequilibria from becoming explosive.

Keywords: Series:; Document; de; travail (search for similar items in EconPapers)
JEL-codes: E31 E32 E5 E61 E62 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-hpe, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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http://www.ofce.sciences-po.fr/pdf/dtravail/OFCEWP2018-40.pdf (application/pdf)

Related works:
Working Paper: Monetary Theory and Policy: The Debate Revisited (2018)
Working Paper: Monetary theory and policy: the debate revisited (2018)
Working Paper: Monetary theory and policy: the debate revisited (2018)
Working Paper: Monetary theory and policy: the debate revisited (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fce:doctra:1840

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