Coordinating Monetary, Fiscal and Financial Policy – A Submission to the Treasury Committee of the UK Parliament

UK monetary policy, following the 2008 recession, was effective at preventing the crisis from having a bigger effect than it otherwise might have done. As a result of experimenting with quantitative easing (an expansion in the Bank’s balance sheet) and qualitative easing (a change in the risk composition of its balance sheet) we learned some important lessons. This submission to the Treasury Select Committee summarizes my understanding of what those lessons were and what they teach us about the future conduct of monetary, fiscal and financial policy.  Whenever my recommendations differ from the existing dominant macroeconomic paradigm, I explain why.