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Notices
MD
Manuel De Diego Prato (not verified)
22nd July 2024 | 3:56am

Very interesting topic. However, I do feel that debating about neutral R, like many other topics in Economics, is a bit like debating about the 'sex of angels.' It can be fun, but ultimately pointless.

Now, for the sake of argument, I would like to make the following observation: You assert that 'The fact is that monetary policy has not been neutral, and central bankers have not been seeking the rate of equilibrium. Rather, they have pushed rates ever lower under the assumption that this is the way to achieve maximum employment, regardless of the imbalances accumulating throughout the economy.'

I don't know exactly on which data you base the statement above, but if that were the case, theory says that we would have had a higher rate of inflation during the pre-pandemic years than what we actually had. Maybe monetary policy was not 'as off' as many people believe.