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Does Financial Dominance Explain the Recent Rise in Inflation?

Author

Listed:
  • Winkler Adalbert

    (Frankfurt School of Finance & Management, Frankfurt am Main, Germany)

Abstract

This paper addresses the question whether the recent rise in inflation can be explained by financial dominance. It is motivated by the fact that the monetary policy response has been slow and timid which might have reflected concerns that a proper response would have triggered substantial financial risks. We find that a misjudgement of aggregate supply conditions provides a better explanation than financial dominance arguments. Still, recent policy moves such as the Transmission Protection Instrument by the European Central Bank and asset purchases by the Bank of England indicate that financial dominance concerns might become more pressing with further monetary tightening.

Suggested Citation

  • Winkler Adalbert, 2022. "Does Financial Dominance Explain the Recent Rise in Inflation?," The Economists' Voice, De Gruyter, vol. 19(2), pages 165-181, December.
    • Handle: RePEc:bpj:evoice:v:19:y:2022:i:2:p:165-181:n:8
    DOI: 10.1515/ev-2022-0025
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    More about this item

    Keywords

    financial dominance; monetary policy; globalization;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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