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Why money matters: Wicksell, Keynes, and the new consensus view on monetary policy

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  • Giuseppe Fontana

Abstract

One of the greatest achievements of the modern mainstream approach to monetary policy is to have rejected the old quantity-theoretic framework, and to have replaced it with a Wicksellian two-interest-rate analysis, which closely reflects the actual behavior of central banks around the world. Starting with a presentation of Wicksell's two-interest-rate analysis and its policy implications, this paper evaluates these recent developments in monetary thought and monetary policy in terms of the acceptance or not of the axiom of neutrality of money and monetary policy.

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  • Giuseppe Fontana, 2007. "Why money matters: Wicksell, Keynes, and the new consensus view on monetary policy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 30(1), pages 43-60.
    • Handle: RePEc:mes:postke:v:30:y:2007:i:1:p:43-60
    DOI: 10.2753/PKE0160-3477300102
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    Cited by:

    1. Fontana, Giuseppe & Sawyer, Malcolm, 2016. "Towards post-Keynesian ecological macroeconomics," Ecological Economics, Elsevier, vol. 121(C), pages 186-195.
    2. Mehmet Ulug & Sayım Işık & Mehmet Mert, 2023. "The effectiveness of ultra-loose monetary policy in a high inflation economy: a time-varying causality analysis for Turkey," Economic Change and Restructuring, Springer, vol. 56(4), pages 2855-2887, August.
    3. P Arestis & A Mihailov, 2009. "Flexible Rules cum Constrained Discretion: A New Consensus in Monetary Policy," Economic Issues Journal Articles, Economic Issues, vol. 14(2), pages 27-54, September.
    4. utku altunöz, 2022. "Describing of central banks’ monetary policy in the context to linear and nonlinear taylor rule: the case of Turkey," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 4641-4662, December.
    5. Jan Korda, 2010. "Komparace nového konsensu jako teoretického rámce cílování inflace s postkeynesovskou ekonomií [A Comparison of New Consensus as a Theoretical Framework of Inflation Targeting with Post-Keynesian E," Politická ekonomie, Prague University of Economics and Business, vol. 2010(1), pages 92-104.
    6. Váry, Miklós, 2021. "The long-run real effects of monetary shocks: Lessons from a hybrid post-Keynesian-DSGE-agent-based menu cost model," Economic Modelling, Elsevier, vol. 105(C).

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