Robert Lucas explained his support for U.S. monetary policy in 2008 as follows

10 Jul 2014 Leave a comment

by Jim Rose in global financial crisis (GFC), great recession, macroeconomics, Robert E. Lucas Tags: , , ,

  • There are many ways to stimulate spending, but monetary policy was the most helpful counter-recession action because it was fast and flexible.
  • There is no other way that so much cash could have been put into the system as fast, and if necessary it can be taken out just as quickly. The cash comes in the form of loans.
  • There is no new government enterprises, no government equity positions in private enterprises, no price fixing or other controls on the operation of individual businesses, and no government role in the allocation of capital across different activities. These were important virtues.
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