Zero interest policy and the new abnormal : a critique / Michael Beenstock.

Format:

Book

Author/Creator:

Beenstock, Michael, 1946- author.

Series:

Oxford scholarship online.

Oxford scholarship online

Language:

English

Subjects (All):

Monetary policy.

Quantitative easing (Monetary policy).

Interest rates.

Finance, Public.

Physical Description:

1 online resource (401 pages)

Place of Publication:

Oxford : Oxford University Press, [2022]

Summary:

In the 'New Normal' central banks set their interest rate to zero and print money through massive quantitative easing, while finance ministries run huge fiscal deficits. Yet inflation remains minimal. 'Zero Interest Policy and the New Abnormal' explains why. It also explains why the 'New Normal' is really the New Abnormal - and why it can't last.

Contents:

Cover

Titlepage

Copyright

Preface

Contents

List of Figures

1 The New Abnormal

Liquidity Trap

Existential Risk

Academic Macroeconomics in Crisis

Globalism v Parochialism and other Dichotomies

Covid-19 Pandemic

Behavioral Macroeconomics

Theory in Brief

The Chapters Ahead

Synopsis

2 Where Macroeconomic Theory went wrong

Wicksell's Cumulative Process

``Natural'' Rate of Interest

The Natural Rate of Interest in the Neoclassical Growth Model

The Dynamics of the Natural Rate of Interest

Accumulation with Money

The New Keynesian Model

Taylor Rule

The Missing Link in New Keynesian Theory

Filtered Output Gaps

Output Gap and Natural Rate Theory

Walras' Law

Quantitative Easing

Balance Sheets

Money and Credit

The Bond Market

Quanatitive Easing under Zero Interest Policy

Krugman's Zero Interest Policy Model

Normative Economics of Quantitative Easing

Fiscal Policy

Accounting Identities

Unpleasant Monetary Arithmetic

Unpleasant Monetary Arithmetic and Zero Interest Policy

Exchange Rates and Interest Rates

Relative and Absolute Interest Parity

The Dynamic Stochastic General Equilibrium Movement

3 Postmodern Macroeconomics

The Postmodern Revolt against Science

Econometric Orthodoxy

The Revolution of 1980

Calibration, Bayesian Priors, and Indirect Estimation

A Critique of the Lucas Critique

Indirect Inference

Return to Econometric Orthodoxy

Integrating the Secular and the Cyclical

4 The Natural Rate of Interest

Literature

Theory

From Theory to Data

National Income Accounting

Measurement Error

Empirical Illustration

Corporation Tax

Marginal Products of Capital

United States

Japan

Germany

United Kingdom

France

Sweden

Australia.

Israel

Overview

5 Descent into Zero Interest Policy and the New Abnormal

Central Bank Policy Rates

Israel

The Effect of Zero Interest Policy on Long-term Interest Rates

Countries with Index-linked Bond Markets

Countries without Index-linked Bond Markets

Corporate Default Risk

Kinetic Inflation

6 Fertility Decline in the New Abnormal?

The Relation between Total and Completed Fertility

Demographic Theory

Quality-Quantity Theory

Basic Model

Parents as Stakeholders

Population Ageing

Empirical Analysis

Discussion

7 Socioeconomic Consequences of the New Abnormal

Pensions

Pension Income and Interest

Economic Inequality

Variance

Gini Inequality

Are Labor Shares and Income Inequality Correlated?

House Prices

Insurance

8 The Japanese Crystal Ball?

The Japanese Economic Miracle

The Lost Decade and a Half

The New Abnormal: Abenomics

The Future

`Face' in Japan's Economic Architecture

Personal Note

Suicide

9 Covid-19 and the New Abnormal

Intergenerational Equity

Mitigation Theory

The SIR Model

The Cost per Life Year Saved

Optimal Mitigation Policy

Stochastic Mitigation Policy

Endogenous Contagion

Identifying the Causal Effects of Mitigation Policy

Covid-19 Equilibrium

Identification by Weak Exogeneity

2020

Measuring Mortality for Covid-19

Mortality and Age

The Cost per Life Year Saved in Israel

The Cost of Mitigation Policy

Estimating the Treatment Effect of Mitigation Policy

The ``Overlapping Generations'' Method

Counterfactual Saving of Life

Reservations and Limitations

2021

Macroeconomic developments.

Economic Recovery in 2021

10 The Return to Normality: Ending the New Abnormal

The Unsustainability of The New Abnormal

Ricardian Unequivalence

Three Aspects of Normalization

Escaping the Liquidity Trap

Krugman's Model

Ending Zero Interest Policy Directly

Public Debt Overhang

Exit Strategy from New Abnormal: Theory

Cryptocurrencies and Existential Risk

Exit Strategy from the New Abnormal: Practice

Debt Arithmetic

Eurozone

European Union Excluding Eurozone

Australia, New Zealand, and Israel

Crashing out of the New Abnormal

Postscript

References

General Index

Index of Names.

Notes:

Also issued in print: 2022.

Includes bibliographical references and index.

Description based on online resource; title from home page (viewed on October 6, 2022).

ISBN:

0-19-194478-5

0-19-266642-8

0-19-266641-X