From demand management to supply restraint. A comparative analysis ofconsistent monetary policy frameworks
DOI:
https://doi.org/10.18041/2539-3669/gestion_libre.20.2025.13384Keywords:
Secular Stagnation, Risk Management, Structural Uncertainty, New Keynesian Paradigm, Monetary Policy, Supply ShocksAbstract
Introduction: The theoretical framework that has guided modern central banking has
fractured. Anchored in the pretense of managing aggregate demand, the conventional
paradigm has proven powerless in the face of the double onslaught of potential secular
stagnation and inflation fueled by supply shocks. This article undertakes an intellectual
autopsy of this paradigm, not to adjust its parameters, but to deconstruct its fundamental
premises.
Objective: The overall objective of this research is to develop a theoretical framework for
macroeconomic risk management that enables us to overcome the limitations of the neo-
Keynesian optimization paradigm in the face of structural uncertainty and supply shocks.
Method: Through a critical synthesis that fosters a dialogue between neo-Keynesian
orthodoxy and its historical monetarist, Austrian, and post-Keynesian critics, the research
exposes the fatal flaws of the model.
Results: It is argued that its cornerstone, the natural rate of interest, is an unobservable
chimera; that their faith in discretion ignores the verdict of history, riddled with policy errors;
and that their conceptual blindness to endogenous financial instability is inexcusable.
Conclusion: Faced with these ruins, the research proposes a shift in philosophy, from the
arrogance of optimization to the humility of risk management. In turn, it articulates the
principles of a robust framework, designed not to steer the economy but to navigate
uncertainty, laying the groundwork for a more resilient and honest monetary policy.
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