Macroeconomic Regulation: A Third Way beyond Keynesianism and Monetarism

In addressing economic downturns, there are two primary approaches in Western macroeconomics: central bank money issuance and government debt issuance. The former is known as monetarism, and the latter is called Keynesianism. In fact, there is a “third path” apart from these two methods, which is to “stimulate the credit-creation ability of commercial banks”. This is a new solution proposed in this paper. “Expanding the credit creation of commercial banks” can also generate a large amount of money for investment without incurring any costs and without leaving any sequelae of economic stimulus.