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Given the current state of monetary policy theory, not having as an explicit gdp growth target doesn't say much. The 2 % inflation target can be seen as the limit of the extent to which the ECB can "stimulate" the economy.

This way of directing central bank policy aims at curbing the ECB's leeway in times of crises and ensure that it isn't "captured by political interests". In normal times however, given the number of strategies available to keep the inflation in range, we can expect the ECB to pick the most 'stimulating' one.

As for those two French paper, I believe they placate the notion that Keynesian policies shouldn't be used to smoothen the business cycle out -- more precisely, by not more than than 3 % of GDP. Buiter on the other hand is more interested in the banking sector and the extent of oversight and regulation it seems to require. At the core, it seems to me, is the notion that the existing banking sector is the only viable one: it is not only that changing it would require massive loss of wealth [I know, for whom is unclear] but also that we don't know of better alternatives.

Buiter, as far as I know, points mostly to the moral hazard argument and the impossibility of oversight in a context of "regulatory capture". I have yet to read his most recent paper, presented at the Jackson Hole Conference, where I think he introduces new policies. I will do that soon, as I am curious as to what he would propose, and the extent to which it follows the rightfully hailed Swedish model of bank rescue.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Wed Sep 3rd, 2008 at 01:01:24 PM EST
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