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The new economy and the old monetary economics

By Willem H. Buiter

Abstract

In this speech,(1) Willem H Buiter, member of the Bank’s Monetary Policy Committee,(2) argues that the behaviour in recent years of the world economy, led by the United States, can, in the opinion of a number of observers, only be understood by abandoning the old conventional wisdoms and adopting a ‘New Paradigm’. Prominent among the structural transformations associated with the New Paradigm are the following: increasing openness; financial innovation; lower global inflation; lower profit margins, reflecting stronger competitive pressures; buoyant stock markets defying conventional valuation methods; a lower natural rate of unemployment; and a higher trend rate of growth of productivity. In this speech, Professor Buiter makes two distinct points. First, the New Paradigm has been over-hyped. Second, to the extent that we can see a New Paradigm in action, its implications for monetary policy have often been misunderstood

Topics: HB Economic Theory
Publisher: Bank of England
Year: 2000
OAI identifier: oai:eprints.lse.ac.uk:16881
Provided by: LSE Research Online
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