Still a need for new macroeconomic tools

Comments on Alan Kohler “Policy without ammunition”, 22/07/2009, http://www.businessspectator.com.au/bs.nsf/Article/Out-of-the-game-pd20090722-U6SPS?OpenDocument&src=sph

There is a big gap in macroeconomics in terms of policy responses to such scenarios. The Fed, and some other central banking authorities have used quantity easing, a creative response that stabilised their and the world financial markets. The world avoided the complete shut-down of key national and the international banking system. That was good.

But now there is still a deep problem of how to get the economies going forward and avoid the Japanese experience of the lost decade in the 1990s, which requires equally creative thinking.

Economists or otherwise, people need to come up with new policy tools for dealing with the so called balance sheet recessions.