Stiglitz urges central banks to focus on credit, not interest rates

Part of the explanation for the recent "extraordinary ineffectiveness" of monetary policy is the inadequacy of central banks' focus on the interest rate, Joseph Stiglitz argues in a recent paper.

Stiglitz, who jointly won the Nobel prize for economics in 2001, says the quantity and terms at which credit is available is much more important than the interest rate in determining whether an economy will grow. He presents the idea in a paper published recently by the National Bureau of Economic