Effective Demand Failures and the Limits of Monetary Stabilization Policy

• 成果类型: Article
• 署名作者: Woodford, Michael
• 署名单位: Columbia University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20201529
• 发表日期: 2022
• 页码: 1475-1521
• 关键词: NETWORKS

摘要

The challenge for stabilization policy presented by the COVID-19 pandemic stems above all from disruption of the circular flow of payments, resulting in a failure of what Keynes (1936) calls effective demand. As a consequence, economic activity in many sectors can be inefficiently low, and interest-rate policy cannot eliminate the distortions-not because of a limit on the extent to which interest rates can be reduced, but because interest-rate reductions fail to stimulate demand of the right sorts. Fiscal transfers are instead well suited to addressing the fundamental problem, and can under certain circumstances achieve a first-best allocation of resources.