Financial innovations have reduced banks' reserve holdings. Some argue the Fed's ability to set interest rates might be compromised. This concerns arises from a misunderstanding of Fed operations. Regardless of the quantity of reserve balances, the Fed can always set its federal funds rate...

Central to current policy debates regarding public pensions, the appropriate macroeconomic policy mix, and any number of other issues related to growth, development, poverty alleviation, and so forth, is the concept of fiscal sustainability. For neoclassical economists, fiscal sustainability is...