Supply Side Keynesianism

Obregon, Carlos (2022): Supply Side Keynesianism. Published in:

Abstract

The argument made in this manuscript is that the two traditional macroeconomic tools, fiscal policy and monetary policy, are insufficient to bring back efficiently into equilibrium an economy that has had a major crisis. Both traditional macro-tools only work through the demand side, and there is no macro-tool at hand to influence the supply side. QE could be understood, in principle, as a new tool that works through the supply side – by providing credit; but it was only used substantially for mortgages both in the 2008 GFC and in the 2020 GP. In this document, it is proposed that QE should be extended to provide credit to the whole productive economy – which will provide policy makers with a new macro-tool capable to stimulate the supply side of the economy in the short term. The new macro-tool proposed does not pretend to substitute the demand side adjustments required using fiscal and monetary policies; but to complement them with a new macro-tool that fosters the rapid recovery of the supply side. Using this new macro-tool will reduce to the minimum possible the demand-supply imbalance that generate unacceptable levels of inflation.

• Item Type: MPRA Paper
• Language: English
• Keywords: macroeconomic, fiscal policy, monetary policy, economy, crisis, QE, supply, credit, Carlos Obregon, GFC, GP, macro-tool, demand, Carlos Obregón, inflation
• Subjects: A - General Economics and Teaching > A1 - General Economics; A - General Economics and Teaching > A1 - General Economics > A10 - General; A - General Economics and Teaching > A1 - General Economics > A11 - Role of Economics ; Role of Economists ; Market for Economists; A - General Economics and Teaching > A1 - General Economics > A13 - Relation of Economics to Social Values; A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics; A - General Economics and Teaching > A1 - General Economics > A19 - Other; E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E0 - General > E01 - Measurement and Data on National Income and Product Accounts and Wealth ; Environmental Accounts; E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy; E - Macroeconomics and Monetary Economics > E0 - General > E03 - Behavioral Macroeconomics; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E19 - Other; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E29 - Other; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General; F - International Economics > F0 - General > F00 - General; F - International Economics > F0 - General > F02 - International Economic Order and Integration; F - International Economics > F1 - Trade > F10 - General; G - Financial Economics > G0 - General > G00 - General; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G1 - General Financial Markets > G10 - General; G - Financial Economics > G1 - General Financial Markets > G19 - Other; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; H - Public Economics > H0 - General > H00 - General

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