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The Theory of Credit and Macroeconomic Stability
In the aftermath of the Great Recession, there is a growing consensus, even among central bank officials, concerning the limitations of monetary policy. This paper provides an explanation for the ineffectiveness of monetary policy, and in doing so provides a new framework for thinking about monetary policy and macro-economic activity. What matters is not so much the money supply or the T-bill interest rate, but the availability of credit, and the terms at which credit is made available. Thedoi:10.7916/d8-hznw-d327 fatcat:dozy6espvzfrzjoddnft3xaaja