Quantitative Easing is not Neutral

The recent statements by Eugene Fama, Nobel Laureate in Economics (by the way, the actual title is Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel), on the fact that Quantitative Easing is neutral have puzzled many. According to him, “QE doesn’t do much”. When analyzed from the perspective of current debates in macroeconomics, this view is rather hard to be categorized, since no serious approach I know of really thinks about QE in these terms.

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Is US in a Liquidity Trap?

Explaining the crises (not all, but many of them) as being liquidity traps is not only a misinterpretation but it also leads to false solutions. Just look at the case of Japan after two decades of “policy experiments”. (New) Keynesians like Krugman have reduced its stagnation problem to a liquidity trap and prescribed a wrong therapy which in the end failed to lead to real economic growth. But probably the case of Japan deserves a separate discussion.

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