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Comments on: Bubbles, stability, Stiglitz http://www.tvhe.co.nz/2011/03/24/bubbles-stability-stiglitz/ The Visible Hand in Economics Sun, 27 Mar 2011 20:00:07 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2011/03/24/bubbles-stability-stiglitz/#comment-33015 Sun, 27 Mar 2011 20:00:07 +0000 http://www.tvhe.co.nz/?p=5827#comment-33015 @raf

Fundamentally, all I’m saying is that they aim to try to ensure that there isn’t undue volatility on the “demand side” as far as we believe that is manageable. However, even this maximum goal of the bank does not imply no output variability – as the economy faces persistent supply shocks (relative price shocks) which the Bank needs to allow the economy to respond to itself.

Aiming for output stability itself betrays this, and will be not only allocatively inefficient but will fundamentally reduce welfare.

]]> By: raf http://www.tvhe.co.nz/2011/03/24/bubbles-stability-stiglitz/#comment-33005 Sun, 27 Mar 2011 04:52:22 +0000 http://www.tvhe.co.nz/?p=5827#comment-33005 “The objective the central bank is to run a fiat money system without incurring undue variability in the real economy”….would you care to expand upon that statement?

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