Washingtonâ??s economic policy debate is stuck, not in partisan gridlock, but in the wrong economics textbook. Politicians and pundits are constantly talking about macroeconomics. Whatâ??s missing is growth economics.
Monetary policy is by definition macro, and the central actor is the Federal Reserve. Is a two-year commitment to a Fed funds rate of zero wise? Should there be a QE3 to boost investment? Interesting questions. But not growth questions. True, a strong and stable dollar is essential for a pro-growth climate. But keep in mind that the Fedâ??s dual mandate is maximum employment and price stability, not growth.
Read Full Article »