Monetary Economics

Monetary policy influences inflation, employment, and economic activity. A stable but dynamic monetary system is vital for supporting economic growth, individual liberty, and a prosperous society. Therefore, we examine the causes and consequences of monetary policy (including inflation), identify ideal and practical steps towards a better monetary policy regime, and look at monetary alternatives and financial regulation.

Articles

Beware the Soft Landing Narrative (Video)

Kate Wand January 23, 2023

“Earle thinks a more charitable version of the Fed’s handling of monetary policy over the last three years might emerge, resulting in less public skepticism about the limits of monetary policy.” ~ AIER

In Retrogress

AIER January 17, 2023

Bad and disproven economic ideas have an uncanny longevity. While knowledge tends to be cumulative in most intellectual fields, the accumulation of knowledge in economics and finance seems to follow a more cyclical pattern. In this edition of the Harwood Economic Review we examine some recent examples of those, and discuss why ideas akin to spontaneous generation or phlogiston theory are periodically reinvigorated and applied in policy measures.

Welcome the Disinflation, Beware the Narrative

Peter C. Earle January 13, 2023

“Let us all hope that disinflation proceeds expeditiously and, if it does, we remain mindful that the outcome is in spite of, rather than owing to, central bankers and their narrow assortment of lagging and unpredictable policy instruments.” ~ Peter C. Earle

FOMC Ratchets Up Inflation Projection

William J. Luther January 2, 2023

“FOMC member projections suggest that inflation will come down only gradually over the next two to three years and that the price level will remain permanently elevated.” ~ William J. Luther

Putting Aggregate Demand and Aggregate Supply to Work

Alexander W. Salter December 30, 2022

“Economists use aggregate demand and aggregate supply (AS-AD model) to understand how inflation and real income growth are jointly determined.” ~ Bryan Cutsinger & Alexander William Salter

Does Government Spending Lead to Inflation?

Bryan Cutsinger December 27, 2022

“The key point is that it is the central bank’s willingness to help finance government spending, not the spending itself, that drives inflation. In short: inflation remains a monetary phenomenon.” ~ Bryan Cutsinger