https://twitter.com/IrvingSwisher/status/1657812041812303876?s=20 There was a small kerfuffle on Twitter created by Olivier Blanchard regarding the money multiplier in the next version of his textbook. Skanda Amarnath gave a reaction which matches my view, but I just want to add a couple of extra comments.
Is it a peculiarly US phenomenon - a bit like their obsession with reserve requirements? There's a paper from the Bank of England that explains there is no multiplier in the UK Sterling Framework.
The *spending* multiplier is of far more interest for its macro implications, yet weirdly that never seems to be discussed or even particularly studied by the mainstream crowd.
Is it a peculiarly US phenomenon - a bit like their obsession with reserve requirements? There's a paper from the Bank of England that explains there is no multiplier in the UK Sterling Framework.
https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2014/qe-and-the-bank-lending-channel-in-the-uk.pdf
That term money multiplier has truly worn out its welcome and I hope most would know by now that banks don't lend reserves in the first place.
The *spending* multiplier is of far more interest for its macro implications, yet weirdly that never seems to be discussed or even particularly studied by the mainstream crowd.