<p>The monetary policy environment has changed considerably since the mid-twentieth century, from the development of economic thinking to the changes in policy priorities and the lessons learned from past experiences. Each transition, from the demise of the gold standard to floating exchange rates, monetary targeting and, more recently, the introduction of inflation targeting, has been a reactive response to the prevailing economic conditions of the time, whether driven by inflation, financial stability concerns, or geopolitical pressures. Despite these changes, the question must be asked: is there a better framework to ensure long-term price stability and economic growth?</p><p>Since the early 1990s inflation targeting has been at the heart of contemporary monetary policy. This regime aims to maintain price stability by keeping inflation close to a medium-term target, generally around 2 per cent annually. While widely adopted by central banks of advanced economies as the global standard, the limitations of this framework have been exposed by financial crises and supply-side shocks. Too often, central banks have underestimated the influence of fiscal policy and their own balance sheet expansions on inflation trends, contributing to monetary policy decisions that have added to the erosion of real incomes and exacerbated the cost-of-living crisis.</p><p>I believe we should have a fundamental rethink of the current monetary policy framework. Central banks should implement a framework that targets the growth rate or level path of nominal GDP (NGDP)<sup>1</sup> rather than relying on an inflation target of 2 per cent. NGDP targeting (NGDPT) offers a more transparent, rule-based approach that reduces subjectivity and the risk of policy errors by looking to stabilise total nominal spending in the economy. In contrast, the current ‘constrained discretion’<sup>2</sup> framework gives policymakers considerable flexibility (discretion) to react to fluctuating economic conditions within loosely defined parameters (constraints). By reducing reliance on discretionary decision-making, NGDPT would increase predictability and transparency for financial markets, thereby allowing central banks to regain any lost credibility.</p><p>NGDPT, also known as nominal income targeting, provides a more flexible and adaptive framework for managing external and supply-side shocks, such as the Covid-19 pandemic and energy price spikes, which contributed to driving inflation to its highest levels in four decades.<sup>3</sup> I argue here that NGDPT is better equipped to maintain long-term economic stability by reducing fluctuations in output and employment more effectively. By reducing reliance on discretionary decision-making, NGDPT would provide a free-market approach to monetary policy and give households and firms clearer guidance on the future path of interest rates.</p><p>My objective is to demonstrate how an NGDPT-based framework could address the deficiencies of the curr
{"title":"Rethinking monetary policy: The case for nominal GDP targeting","authors":"Damian Pudner","doi":"10.1111/ecaf.12711","DOIUrl":"https://doi.org/10.1111/ecaf.12711","url":null,"abstract":"<p>The monetary policy environment has changed considerably since the mid-twentieth century, from the development of economic thinking to the changes in policy priorities and the lessons learned from past experiences. Each transition, from the demise of the gold standard to floating exchange rates, monetary targeting and, more recently, the introduction of inflation targeting, has been a reactive response to the prevailing economic conditions of the time, whether driven by inflation, financial stability concerns, or geopolitical pressures. Despite these changes, the question must be asked: is there a better framework to ensure long-term price stability and economic growth?</p><p>Since the early 1990s inflation targeting has been at the heart of contemporary monetary policy. This regime aims to maintain price stability by keeping inflation close to a medium-term target, generally around 2 per cent annually. While widely adopted by central banks of advanced economies as the global standard, the limitations of this framework have been exposed by financial crises and supply-side shocks. Too often, central banks have underestimated the influence of fiscal policy and their own balance sheet expansions on inflation trends, contributing to monetary policy decisions that have added to the erosion of real incomes and exacerbated the cost-of-living crisis.</p><p>I believe we should have a fundamental rethink of the current monetary policy framework. Central banks should implement a framework that targets the growth rate or level path of nominal GDP (NGDP)<sup>1</sup> rather than relying on an inflation target of 2 per cent. NGDP targeting (NGDPT) offers a more transparent, rule-based approach that reduces subjectivity and the risk of policy errors by looking to stabilise total nominal spending in the economy. In contrast, the current ‘constrained discretion’<sup>2</sup> framework gives policymakers considerable flexibility (discretion) to react to fluctuating economic conditions within loosely defined parameters (constraints). By reducing reliance on discretionary decision-making, NGDPT would increase predictability and transparency for financial markets, thereby allowing central banks to regain any lost credibility.</p><p>NGDPT, also known as nominal income targeting, provides a more flexible and adaptive framework for managing external and supply-side shocks, such as the Covid-19 pandemic and energy price spikes, which contributed to driving inflation to its highest levels in four decades.<sup>3</sup> I argue here that NGDPT is better equipped to maintain long-term economic stability by reducing fluctuations in output and employment more effectively. By reducing reliance on discretionary decision-making, NGDPT would provide a free-market approach to monetary policy and give households and firms clearer guidance on the future path of interest rates.</p><p>My objective is to demonstrate how an NGDPT-based framework could address the deficiencies of the curr","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 2","pages":"323-331"},"PeriodicalIF":1.0,"publicationDate":"2025-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecaf.12711","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144244992","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article expands Milton Friedman's spending matrix to analyse ‘spending efficiency’ and ‘preference compatibility’ across different economic systems against five key outcome criteria. By generalising Friedman's typology, it compares efficiency and freedom as systems shift from laissez-faire capitalism to communism, illustrating a gradual deterioration in their key outcomes. While government intervention is sometimes necessary to address market failures, its role should always be carefully limited to avoid inefficiency and misalignment with individual preferences. The insights may provide guidance for policymakers in designing economic systems and policies that promote both economic prosperity and personal liberty.
{"title":"Milton Friedman's spending matrix revisited: ‘Spending efficiency’ and ‘preference compatibility’ across different economic systems","authors":"Ali Zeytoon-Nejad","doi":"10.1111/ecaf.12700","DOIUrl":"https://doi.org/10.1111/ecaf.12700","url":null,"abstract":"<p>This article expands Milton Friedman's spending matrix to analyse ‘spending efficiency’ and ‘preference compatibility’ across different economic systems against five key outcome criteria. By generalising Friedman's typology, it compares efficiency and freedom as systems shift from laissez-faire capitalism to communism, illustrating a gradual deterioration in their key outcomes. While government intervention is sometimes necessary to address market failures, its role should always be carefully limited to avoid inefficiency and misalignment with individual preferences. The insights may provide guidance for policymakers in designing economic systems and policies that promote both economic prosperity and personal liberty.</p>","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 2","pages":"289-312"},"PeriodicalIF":1.0,"publicationDate":"2025-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecaf.12700","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144244497","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Some reflections on Hardin's property rights solution to the tragedy of the commons","authors":"Lawrence W C Lai","doi":"10.1111/ecaf.12696","DOIUrl":"https://doi.org/10.1111/ecaf.12696","url":null,"abstract":"","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"140-146"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article aims to provide a comprehensive understanding of the main drivers of food insecurity in five understudied Arab countries in the Middle East and North Africa (MENA) region (Egypt, Tunisia, Jordan, Sudan, and Morocco) during the COVID-19 pandemic. Unlike previous studies, this article explains the lessons learned from the pandemic to inform appropriate responses to any future crises. The study used the Combined COVID-19 MENA Monitor Household Survey (CCMMHH), compiled by the Economic Research Forum in 2020–21. To determine the key factors affecting food insecurity, multivariate regression with fixed effects for waves and administrative zones was employed to capture the unobservable factors. Permanent and temporary loss of jobs and decrease in wages were identified as significant independent risk factors for experiencing food insecurity. Work characteristics played a significant role in shaping food security in the surveyed Arab countries. The pandemic has highlighted the social groups whose food security must be protected to achieve economic stability in light of such crises.
{"title":"Key lessons learned from food insecurity during the COVID-19 pandemic in Arab countries","authors":"Suzan Abdel-Rahman, Mohamed R Abonazel","doi":"10.1111/ecaf.12683","DOIUrl":"https://doi.org/10.1111/ecaf.12683","url":null,"abstract":"<p>This article aims to provide a comprehensive understanding of the main drivers of food insecurity in five understudied Arab countries in the Middle East and North Africa (MENA) region (Egypt, Tunisia, Jordan, Sudan, and Morocco) during the COVID-19 pandemic. Unlike previous studies, this article explains the lessons learned from the pandemic to inform appropriate responses to any future crises. The study used the Combined COVID-19 MENA Monitor Household Survey (CCMMHH), compiled by the Economic Research Forum in 2020–21. To determine the key factors affecting food insecurity, multivariate regression with fixed effects for waves and administrative zones was employed to capture the unobservable factors. Permanent and temporary loss of jobs and decrease in wages were identified as significant independent risk factors for experiencing food insecurity. Work characteristics played a significant role in shaping food security in the surveyed Arab countries. The pandemic has highlighted the social groups whose food security must be protected to achieve economic stability in light of such crises.</p>","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"100-122"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389358","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Money in the twenty-first century: Cheap, mobile, and digital By Richard Holden. University of California Press. 2024. pp. 232. £24.00 (hbk). ISBN: 978-0520395268. £21.54. (Kindle ebk). ISBN: 978-0520395275","authors":"Susanna Booth","doi":"10.1111/ecaf.12693","DOIUrl":"https://doi.org/10.1111/ecaf.12693","url":null,"abstract":"","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"167-169"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389362","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Canons of liberal classics exclude the work of G. W. F. Hegel. Hegel's approach to the right to own private property, however, reflected his reading of James Steuart and of Adam Smith, and certain questions raised in Law and Economics urge reading anew Hegel on property.
{"title":"Hegel on the right to private property","authors":"Benedikt Koehler","doi":"10.1111/ecaf.12682","DOIUrl":"https://doi.org/10.1111/ecaf.12682","url":null,"abstract":"<p>Canons of liberal classics exclude the work of G. W. F. Hegel. Hegel's approach to the right to own private property, however, reflected his reading of James Steuart and of Adam Smith, and certain questions raised in Law and Economics urge reading anew Hegel on property.</p>","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"92-99"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143388967","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Catholic social thought, the market and public policy: Twenty-first century challenges Edited by Philip Booth and André Azevedo Alves. St Mary's University Press. 2024. 302 pp. £40.00 (hbk). ISBN: 978-1916786004. £28.00 (ebk). ISBN: 978-1916786028","authors":"Robert C B Miller","doi":"10.1111/ecaf.12657","DOIUrl":"https://doi.org/10.1111/ecaf.12657","url":null,"abstract":"","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"165-166"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389361","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"No one left: Why the world needs more children By Paul Morland. Forum. 2024. pp. 272. £20.00 (hbk). ISBN: 978-1800754102. £12.99 (pbk). ISBN: 978-1800754126. £13.45 (ebk). ISBN: 978-1800754119","authors":"Charles Amos","doi":"10.1111/ecaf.12692","DOIUrl":"https://doi.org/10.1111/ecaf.12692","url":null,"abstract":"","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"170-172"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389121","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The findings in the literature on the influence of government ideology on economic freedom are mixed. How to aggregate or disaggregate measures of limited government is an open question and causality remains a problem in most studies. This article employs data on government spending and regulation using a new disaggregation scheme developed by Ryan Murphy, and employs a causal strategy relying on comparing general results with results after close elections. The empirical findings indicate that government investment and ownership are affected by government ideology while a statistically significant association with government spending probably reflects the reverse causal direction.
{"title":"What's ideological about limited government?","authors":"Christian Bjørnskov","doi":"10.1111/ecaf.12689","DOIUrl":"https://doi.org/10.1111/ecaf.12689","url":null,"abstract":"<p>The findings in the literature on the influence of government ideology on economic freedom are mixed. How to aggregate or disaggregate measures of limited government is an open question and causality remains a problem in most studies. This article employs data on government spending and regulation using a new disaggregation scheme developed by Ryan Murphy, and employs a causal strategy relying on comparing general results with results after close elections. The empirical findings indicate that government investment and ownership are affected by government ideology while a statistically significant association with government spending probably reflects the reverse causal direction.</p>","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"2-16"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389363","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The care dilemma: Caring enough in the age of sex equality By David Goodhart. Forum. 2024. pp. 256. £25.00 (hbk). ISBN: 978-1800753617. £12.99 (pbk). ISBN: 978-1800753631. £11.99 (Kobo ebk). ISBN: 978-1800753624","authors":"Annabel Denham","doi":"10.1111/ecaf.12697","DOIUrl":"https://doi.org/10.1111/ecaf.12697","url":null,"abstract":"","PeriodicalId":44825,"journal":{"name":"ECONOMIC AFFAIRS","volume":"45 1","pages":"162-164"},"PeriodicalIF":1.0,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143389360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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