A new paradigm for macroeconomic policy
by Philip Arestis, Malcolm Sawyer
International Journal of Public Policy (IJPP), Vol. 7, No. 1/2/3, 2011

Abstract: In this paper we advocate a way of approaching macroeconomic policy, which stands in contrast to the now discredited 'new consensus in macroeconomics' policy framework. The five pillars of our approach are: the need for budget deficits to support the level of aggregate demand; full consideration of income distribution and its implications for the level of demand; the interest rate policy pursued by the central bank should aim for a constant real rate of interest with that interest rate broadly in line with the rate of growth; the coordination of economic policies with the implication of an end of central bank independence; and the key policy objective of the central bank should be financial stability.

Online publication date: Wed, 14-Jan-2015

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