Taming the New Consensus: Hysteresis and Some Other Post Keynesian Amendments

Abstract

Not so long ago, most economists believed that central banks ought to set money supply targets, implementing these targets by controlling the supply of base money. The New Consensus among central bankers and economists active in the field of monetary economics is now that central banks ought to set target nominal interest rates, thus controlling real interest rates and influencing output and inflation rates. Still, in the 1960s and 1970s, those academics who argued that central banks could not control the supply of money and had to implement monetary policy through interest rate targeting were ridiculed. Their views were considered sterile and dépassées . These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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