On the Futility and Hazards of Monetary Heroics
Ekonomisk Debatt Issue 4/2017
31 Pages Posted: 28 Feb 2017 Last revised: 3 Sep 2017
Date Written: February 27, 2017
The decentralized enterprise that sustains the dynamism of economies makes top-down monetary interventions, such as quantitative easing, that target aggregates such as overall inflation, futile. Moreover, economic stability and dynamism also require prudent, decentralized lending to decentralized borrowers. But, sustained monetary interventions aimed at aggregate inflation (or employment) targets induce imprudent credit extension, jeopardizing stability and dynamism.
Keywords: innovation, monetary policy, decentralization, quantitative easing
JEL Classification: E5, N20, O33
Suggested Citation: Suggested Citation