Should the Implementation of Monetary Policy Be Subject to Rules?

Martin Watts () and George Pantelopoulos ()
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Martin Watts: The University of Newcastle
George Pantelopoulos: The University of Newcastle

Chapter Chapter 2 in Debates in Monetary Macroeconomics, 2022, pp 23-45 from Springer

Abstract: Abstract In this chapter, the authors adopt a Modern Monetary Theory lens and argue that the setting of interest rates should be subject to rules, such as a target policy rate, as opposed to central bank discretion. A number of theoretical arguments are advanced as to why reliance on monetary policy to achieve full employment and price stability is ill-advised. Thus monetary policy would need to be complemented by the fiscal policy which has stronger and more predictable short-term effects on the macroeconomy. The authors advocate a job guarantee, along with infrastructure spending, which address the challenges associated with achieving and maintaining full employment and price stability.

Keywords: Central banks; Fiscal policy; Job guarantee; Interest rate target; Monetary policy; Rules versus discretion (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-11240-9_2

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DOI: 10.1007/978-3-031-11240-9_2

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