The Use of Macroeconomic Legislation to Save the Israeli Economy in 1985

Abstract

In my oral comment, at the symposium discussing the book, I made three points. The first point was in support of the book’s thesis that the zero lower bound on interest rates makes monetary policy an ineffective tool to stimulate aggregate demand at sufficient levels to fight recessions. I argued that monetary policy is further constrained by recent developments in virtual currencies issued by private actors, especially decentralized cryptocurrencies, known as distributed ledger technology. The second point was that the book’s main thesis, namely that law should be used in addition to traditional monetary and fiscal tools to achieve macroeconomic goals, reminds us of a classic law and economics debate—whether the law should be used for redistributive purposes alongside the tax and transfer system, or equity should be left to be promoted by the tax and transfer system alone. In this written comment, I choose to elaborate on the...