Modern governments with a floating currency face no inherent financial constraints. Unfortunately, most modern macro-theorists continue to write as if these nations were financially constrained by (1) the magnitude of current tax "revenue" and (2) the private sector's willingness to "finance"...

This paper addresses three monetary policy issuesâpolicy independence, choice of targets, and rules versus discretion. According to the new monetary consensus, the central bank needs policy independence to build credibility, the operating target is the overnight interbank lending rate, and the...