All posts in category Monetary Policy

 Brace for impact

2022 has been a year full of uncertainties for the global economy so far, and it looks like it will continue. Rising inflation, the invasion of Ukraine, and supply chain problems arising from China and Russia… None of this makes the Fed’s job any easier. But even before all this, the Fed had begun to […]

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, 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 […]

Indicators of A Good Monetary Policy

There has been a heated debate lately about whether inflation is transitory or not. I think I caught this discussion a little late, but for various reasons, it took me quite a while to finalize this post, and I see no reason not to share it now. Note that most of the post was written […]