Economic Policies of the New Consensus Macroeconomics: A Critical Appraisal

Geoffrey Ingham has always been interested in the areas of money and monetary policy and he has written a great deal on these important issues. One of his main strengths is a thorough understanding of the economic theory of money and his ability to integrate this positively with his definitive understanding of the sociological approach to money. Although the title of this contribution suggests that it is concerned with economic policies, the focus is on monetary policy for reasons that become obvious in what follows in this chapter. It is a real pleasure to contribute to this particular volume and provide a critique of the New Consensus in Macroeconomics (NCM in short), especially in relation to its monetary policy aspects. NCM has emerged over the past couple of decades or so, and has become highly influential in the areas of current macroeconomic thinking and macroeconomic policy, especially monetary policy. The NCM is now firmly established amongst both academia and economic policy circles, although doubts have begun to emerge in view of the influence and role that the paradigm played in the emergence of the ‘great recession’ (see, for example, Arestis 2009b, 2011a). Among the doubts that have been expressed subsequently is the omission from the NCM model of a financial sector from its type of model and other problems discussed herein.