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Should the Implementation of Monetary Policy Be Subject to Rules?

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Debates in Monetary Macroeconomics

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Abstract

In this chapter, the authors adopt a Modern Monetary Theory lens and argue that the setting of interest rates should be subject to rules, such as a target policy rate, as opposed to central bank discretion. A number of theoretical arguments are advanced as to why reliance on monetary policy to achieve full employment and price stability is ill-advised. Thus monetary policy would need to be complemented by the fiscal policy which has stronger and more predictable short-term effects on the macroeconomy. The authors advocate a job guarantee, along with infrastructure spending, which address the challenges associated with achieving and maintaining full employment and price stability.

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Authors and Affiliations

  1. Newcastle Business School, The University of Newcastle, Newcastle, NSW, Australia

    Martin Watts & George Pantelopoulos

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  1. Martin Watts
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  2. George Pantelopoulos
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Correspondence to Martin Watts .

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  1. Interlaken, NJ, USA

    Steven Pressman

  2. Aurora, ON, Canada

    John Smithin

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Watts, M., Pantelopoulos, G. (2022). Should the Implementation of Monetary Policy Be Subject to Rules?. In: Pressman, S., Smithin, J. (eds) Debates in Monetary Macroeconomics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-11240-9_2

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  • DOI: https://doi.org/10.1007/978-3-031-11240-9_2

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