Implications and Relevance
Edited by Phillip Arestis, Michelle Baddeley and John S.L. McCombie
In January 2004 the Cambridge Centre for Economic and Public Policy, based in the Department of Land Economy, University of Cambridge, UK, was inaugurated. To celebrate the event a conference took place in March 2004 at Downing College. Most appropriately, the theme of the conference was the ‘New Consensus Monetary Policy’. The papers included in this volume are a collection of those presented to that conference. Recent developments in macroeconomic and monetary thinking have given a new impetus to the management of the economy. The use of monetary policy by way of manipulating the rate of interest to affect inﬂation is now well accepted by both academic economists and central bank practitioners (the works of Bernanke et al., 1999; Clarida et al., 1999, 2000; Issing, 2004; King, 1997; Svensson, 1999, are good examples). The explicit control of the money supply, which was fashionable in the 1970s and 1980s in the UK, the USA, Europe and elsewhere, was abandoned in favour of monetary policy rules that focus on interest rate manipulation by the central bank. The objective is to achieve an inﬂation target, either speciﬁc or within a range. This volume begins with an assessment of this new thinking in macroeconomics and monetary theory. In Chapter 2, ‘New Consensus Monetary Policy: an appraisal’, Philip Arestis and Malcolm Sawyer suggest that many countries have adopted the New Consensus Monetary Policy (NCMP) since the early 1990s in an attempt to reduce inﬂation to low levels. Since then, this policy...