ECONOMIC AFFAIRS最新文献_第9页

Rejoinder 反驳

IF 1.4

ECONOMIC AFFAIRS Pub Date : 2023-09-29 DOI: 10.1111/ecaf.12594

Tim Congdon

{"title":"Rejoinder","authors":"Tim Congdon","doi":"10.1111/ecaf.12594","DOIUrl":"https://doi.org/10.1111/ecaf.12594","url":null,"abstract":"In my critique of ‘monetary-base monetarism’ (Congdon, 2023), I took the offending set of ideas to pivot on the claim that the change in the monetary base by itself determines inflation. I concentrated on the weaknesses of that approach to macroeconomic analysis. I did not develop my favoured alternative view, which might be called ‘broad-money monetarism’, where a key proposition is that changes in the quantity of money, broadly defined, determine inflation. But a potential debate between the two accounts of monetarism was implicit in my article.Important issues are at stake. Consider the numbers for the four years to mid-2012, given in Table 1. In the Great Recession central banks adopted measures which had contrasting effects on the different money aggregates. Under the Basel III rules, being introduced from September/October 2008, they imposed higher capital-to-risk-asset ratios on the commercial banks. The change in capital regulation caused these banks to shrink risk assets. This would have led to a contraction in broad money if nothing else had been done.1 Fortunately, something else was done. From late November 2008 the Federal Reserve embarked on large-scale purchases of assets from private sector non-banks (or ‘quantitative easing’), financed by the issue of cash reserves to the commercial banks. Such purchases added to bank deposits and stopped broad money from falling. But the issue of cash reserves led to an explosion of the monetary base. The Bank of England followed a few months after the Fed, with its QE programme beginning in March 2009.2Which concept of ‘money’ was the correct one to use in macroeconomic prognosis? Should economists have worried – in the four years under discussion – about the inflation perhaps threatened by the trebling of the base in the USA and its quadrupling in the UK? Or should they instead have been concerned that broad money was barely growing at all, signalling very low inflation and possibly even deflation?On 15 November 2010, 23 top-ranking, mostly American economists wrote an ‘Open Letter to Ben Bernanke’ (then the Fed's chairman), which was reported in the Wall Street Journal (2010). Several of them had purported monetarist affiliations. The letter contained the following sentences:To some extent my differences from Scott Sumner may be semantic, with the two of us merely – to use his words – ‘talking past each other’. But I suspect that substantive disagreements remain. I was dismayed that in his reply to my article he said:It was exactly this sort of reasoning which provoked my article. Let us recall what actually happened in and after the Great Recession. In the USA the monetary base trebled and in the UK it quadrupled, even more dramatic surges than Sumner's doubling, yet in both countries inflation in the early 2010s was the lowest since the 1950s. Not only were the signatories to the Open Letter ","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"43 3","pages":"441-444"},"PeriodicalIF":1.4,"publicationDate":"2023-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecaf.12594","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"50147990","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}