Polgári Szemle 2018. különszám [antikvár]

Civic Review, Vol. 14, Special Issue, 2018, 5-11, DOI: 10.24307/psz.2018.0401 On the Renewal of Economic Thinking Welcome by the Editor-in-Chief i Journal of Economic Literature (JEL) codes: All, E6, Fll, F65, H6, 015, P41 Keywords: public finances, monetary policy, training in economics, London School of Economics, Hungary History in Retrospection to the Period before the Crisis Prior to the crisis that erupted in 2007-2008, there was a general consensus among the key economic policy theoreticians that financial regulation was not a macroeco-nomic instrument, and the mission of monetary policy called for the "single aim, single instrument", while doubts regarding the efficiency of fiscal policy became an entrenched pattern. In this approach, predilection to market participants' automa-ticity and the minimization of the state's role in economy organisation, control and regulation constituted the generally accepted pattern, and central banks operated as "islands'* in the world of government finances. Thus the most important goal expected of monetary policy was the stabilisation of inflation, at a low level, possibly around 2 per cent. The reason for this was that back then the stabilisation of inflation was believed to also stabilise the output gap, and the closed output gap was thought to ensure optimum GDP growth, also accepted for welfare considerations. However, it has been confirmed that if central banks only endeavour to stabilise inflation, economies end up in output gap bubbles, as seen, in the form of an overflow in lending, (first) in the Anglo-Saxon mortgage markets (in 2007). This, on the other hand, also destabilised inflation, in other words, in terms of inflation, tight inflation targeting proved to run counter to the intentions. Thus the lesson is that inflation must be stabilized but this cannot be the single objective of central banks. Since then, the economic pohcy consensus implemented among the oudined framework conditions has also failed in practice. Crises can and do hit advanced mar-