"How Should Non-Depression Economics Be Changed?"

At TPM Book Club:

How Should Non-Depression Economics Be Changed?, by Mark Thoma: Brad's definition of non-depression economics gives us a set of policy beliefs that "is no longer sufficient doctrine for our age," but he doesn't tell us why it is no longer sufficient, or what the new doctrine should be.

One reason the doctrine is no longer sufficient is that it has not been able to prevent the development of large asset price bubbles. And worse, as we are seeing right now, monetary policy cannot necessarily clean up the problems that occur when asset bubbles pop. The question, then, is how the doctrine can be updated so that it does a better job of preventing asset bubbles from developing. ...[...continue reading...]...