jamesz

Monetary policy is not the interest rate

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It’s the rule, writes Christy Romer:

The regime shift we are seeing in Japan is just the kind of bold action that might actually succeed in changing both inflation and growth expectations a substantial amount. As a result, it may be an effective tool for encouraging robust recovery and an end to deflation.

Nick Rowe has been saying that for a while but, before we get too gung-ho, Romer cautions:

I don’t know if the Japanese experiment with monetary regime change will work. But I am confident that we will learn a great deal because they had the nerve to try.

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Trackbacks & Pingbacks

  1. Yo RBNZ | TVHE says:
    May 30, 2013 at 19:50

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    May 27, 2013 at 10:21

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  3. Beware those bearing gifts of free exchange rate depreciation | TVHE says:
    May 25, 2013 at 17:12

    […] in NZ compared to the rest of the world.  The RBNZ doesn’t set any of these things – monetary policy is the inflation target, and has no impact on medium-long term real rates or deficits.  Shouldn’t we try asking why […]

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