Contemporary monetary systems permit those in positions of authority to exercise discretionary power in the pursuit of monetary policy objectives. We argue there are strong prima facie reasons why this is normatively problematic. Engaging the literature on the rule of law, we argue that a...

While the primary causes of the 2007-8 financial crisis are disputed, many economists hold that the monetary policy missteps played a role in causing or prolonging the financial crisis. In light of the perceived failure of monetary orthodoxy, monetary models are being theoretically refined and...

This paper makes a simple but underappreciated point: due to the open-ended nature of constitutional entrepreneurship, the personal characteristics of constitutional entrepreneurs — intellect, will, virtues and vices, etc. — directly bear on constitutional change. The paper demonstrates this...

We extend the literature on ‘monetary constitutions' by arguing that binding rules must go beyond specifying the behavior of the monetary authority. Instead, a genuine monetary constitution must also be a financial constitution: it must take into account the natural and evolved links between...

We explore extended liability for bank shareholders as a method for mitigating moral hazard in insured banks. The dominant approach to maintaining financial stability employs piecemeal regulations concerning specific bank behaviors; we propose this difficult practice can be sidestepped by...

In this paper I offer a novel interpretation of the challenges posed by ‘constitutional drift' — the tendency for de facto political procedures to alter when these procedures no longer are incentive-compatible for those wielding political power — for sound governance institutions, with...

The New Austrian (also called Neo-Mengerian) paradigm emphasizes the importance of nonequilibrium and emergent processes in explaining the social world. In this paper I analyze macroeconomic policy from a New Austrian perspective. I define macroeconomic policy broadly, encompassing not only...

We use a model in which media of exchange are essential to examine the role of liquidity and monetary policy on production and investment decisions in which time is an important element. Specifically, we consider the effects of monetary policy on the length of production time and entry and exit...

This paper analyses the renewed scholarly interest in the Mises-Hayek, or “Austrian,” theory of the business cycle since the 2008 financial crisis. Understandably, the economics profession has broadened its search for the crises's explanation beyond the standard DSGE framework. Austrian...

Of the leading versions of lender of last resort policy, which is to be preferred in a world of realistic incentive and information imperfections? The three most prominent versions of lender of last resort policy are: the Classical system of central bank lending on good collateral at a penalty...