Daniel Kaufmann on Swiss monetary policy
My biggest frustration over the past decade is how often I see economists misdiagnose the stance of monetary policy, either reasoning from price changes or reasoning from quantity changes. The “reason from a price change” problem has been discussed extensively in this blog, so today I’ll focus on reasoning from a quantity change.Many economists assume that a country that has done extensive QE has, ipso facto, adopted an expansionary monetary policy. That is certainly true in some cases, but in other cases the QE is a defensive move, an endogenous response to previous tight money policies that drove nominal interest rates to zero and money demand to very high levels.Thus I was very pleased when David Beckworth directed me to an article that gets the causation right. The article is by ...
