Financial Stability, Monetarism and the Wicksell Connection
AbstractIn today's discussions of central banking, maintaining macro-financial stability has only recently appeared along-side the pursuit of low inflation as an important policy goal. This is in strong contrast to the earlier literature, where financial stability was often the main concern of the theory of central banking. This theme is explored here first from the point of view of the monetarist tradition, which treated an excess demand for money which the central bank in its capacity as lender of last resort had an obligation to relieve as a central feature of financial crises; and then from that of a later Wicksellian tradition, where co-ordination failures in the inter-temporal allocation of resources that it was monetary policy's task to avoid, were emphasized. Though there are no long-lost sure cures for financial instability awaiting discovery in the older literature, its emphasis on the potential for markets to fail to clear provides a helpful perspective on the phenomenon, often missing from modern models of the conduct of monetary policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Western Ontario, Economic Policy Research Institute in its series University of Western Ontario, Economic Policy Research Institute Working Papers with number 20073.
Date of creation: 2007
Date of revision:
Contact details of provider:
Postal: Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/epri_workingpapers.html
financial stability; financial instability; crises; co-ordination failure; lender of last resort; inflation; monetarism; forced saving; Wicksell;
Other versions of this item:
- David Laidler, 2009. "Financial Stability, Monetarism and the Wicksell Connection," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 1(1), pages 60-79, September.
- B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School)
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-CBA-2007-10-27 (Central Banking)
- NEP-HPE-2007-10-27 (History & Philosophy of Economics)
- NEP-MAC-2007-10-27 (Macroeconomics)
- NEP-MON-2007-10-27 (Monetary Economics)
- NEP-PKE-2007-10-27 (Post Keynesian Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Claudio Borio & Haibin Zhu, 2008.
"Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism?,"
BIS Working Papers
268, Bank for International Settlements.
- Borio, Claudio & Zhu, Haibin, 2012. "Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?," Journal of Financial Stability, Elsevier, vol. 8(4), pages 236-251.
- Juan Pablo Zárate Perdomo & Adolfo Léon Cobo Serna & Jose Eduardo Gómez González, 2012.
"Lecciones de las crisis financieras recientes para el diseño e implementación de las políticas monetaria y financiera en Colombia,"
Borradores de Economia
708, Banco de la Republica de Colombia.
- Juan Pablo Zárate Perdomo & Adolfo León Cobo & José Eduardo Gómez Gónzalez, 2012. "Lecciones de las crisis financieras recientes para el diseño e implementación de las políticas monetaria y financiera en Colombia," BORRADORES DE ECONOMIA 009601, BANCO DE LA REPÚBLICA.
- Sheetal K. Chand, 2012. "The Relevance of Haavelmo's Macroeconomic Theorizing for Contemporary Macro Policy Making," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 37, pages 3.
- Howitt, Peter, 2012. "What have central bankers learned from modern macroeconomic theory?," Journal of Macroeconomics, Elsevier, vol. 34(1), pages 11-22.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.