The demise of “traditional macroeconomics” and monetary policy

We use the term “the demise of traditional macroeconomics” to refer to the disappearance in OECD countries of: The Phillips curve (the correlation between the economic cycle and inflation); The long-term link between the money supply and prices. Monetary policy in OECD countries has not yet reacted to the demise of traditional macroeconomics: In theory, monetary policy always consists in an intervention in the economic cycle to keep inflation close to the inflation target; Central bank independence, i.e. the absence of coordination between monetary policy and other economic policies, is only acceptable if, in the long term, monetary policy has an effect only on inflation and not on the equilibrium in the real economy .