This paper engages the last testimony of the Chairman of the Federal Reserve System, Alan Greenspan, before a joint session of Congress in July 2005. It identifies nine areas we relate to the arguments of John Kenneth Galbraith, summarized in his recent contribution, The Economics of Innocent...

Relevant economic literature frequently focuses on the impact of credit shocks on housing prices. The macroeconomic doctrine of the new consensus macroeconomics completely ignores bank credit. However, the Great Recession has highlighted the importance of bank credit. The purpose of this article...

Relevant economic literature frequently focuses on the impact of credit shocks on housing prices. The macroeconomic doctrine of the new consensus macroeconomics completely ignores bank credit. However, the Great Recession has highlighted the importance of bank credit. The purpose of this article...

Current economic policy upgrades monetary policy and downgrades fiscal policy. Monetary policy involves the manipulation of the central bank interest rate, with the specific objective of achieving the main goal of monetary policy, which is, in most cases, the inflation rate. Fiscal policy should...

This paper attempts to quantify the U.S. housing market slump and its likely impact on consumption. In doing so, it bypasses the traditional approach that suggests that there is no nationwide housing market but a compendium of segmented markets. The paper is not an exercise in forecasting but an...

Recent developments in macroeconomic policy, both in terms of theory and practice, have elevated monetary policy while fiscal policy has been downgraded. Monetary policy has focused on the setting of interest rates as the key policy instrument, along with the adoption of inflation targets and...

Practical monetary policy concerns and recent theoretical developments have revived interest in the concept of a "natural" equilibrium real interest rate. The natural real interest rate is potentially an important concept for monetary policy makers and some researchers have suggested that the...

This paper deals with the empirical aspects of the "new" monetary policy framework, known as "inflation targeting." Applying intervention analysis to structural time-series models, new empirical evidence is produced in the case of ten countries. These results demonstrate that in terms of its...

We examine the conduct of monetary policy as implemented by the European Central Bank (ECB) throughout the euro area. Two distinct but closely related approaches are utilized, both of which rely on the assumption that monetary policy can be usefully characterized in terms of a simple Taylor...