Friday, November 30, 2012
Monetary Policy - Not a Commandment from God, but, rather... Policy
Krugman: [A]ppropriate macroeconomic policy depends on the situation. Rules designed to prevent irresponsible inflation and/or deficits may help when inflation is your problem; when you are instead a depressed economy in a liquidity trap, they become a lead-weighted straitjacket. As Simon Wren-Lewis says, it’s pretty weird to obsess over the risk that you might let governments off the hook when there is in fact no hook — and the problem is that governments are behaving as if there were.