All posts in category Market Monetarism

The Long-Run Effects of Monetary Policy on Interest Rates

After reading Scott Sumner’s recent paper on the Princeton School of Macroeconomics and Zero Lower Bound, I revisited papers of other Princeton economists.[1]Sumner, Scott, The Princeton School and the Zero Lower Bound (October 2021). Mercatus Center Working Paper, https://www.mercatus.org/publications/monetary-policy/princeton-school-and-zero-lower-bound In the second part of the paper, Sumner discussed the Princeton School’s relationship with new schools […]

IS-LM is not a useful model

I have to admit that I have rarely used the IS-LM model since I became interested in economics. Instead, I find the AD-AS model much more useful. Of course, this does not mean that there is a major theoretical flaw in the IS-LM model. Rather, I think that the inferences that economists make by looking […]

Random thoughts on economics

I think most people understand the supply and demand less than we think. That’s because supply and demand are more confusing and complex than what is taught in mainstream EC101 lectures today. Maybe you don’t think so, but I do. Suppose we asked students who have already taken EC101&102: “Oil prices fell. For this reason, […]

Market Monetarism is more than NGDP Targeting

It’s true that I prefer NGDP Targeting like many other market monetarists. But I also think the Fed did a pretty good job during the Grand Moderation without NGDP Target.In fact, market monetarism is mostly about another set of ideas. The important thing here is to keep in mind that NGDP targeting is not on […]