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Monetary Policy With Investment-Saving Imbalances

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  • Roberto Tamborini

Abstract

Financial instability is the new challenge for monetary policy. Most studies indicate that financial crises follow prolonged unwinding of investment-saving imbalances (ISI). These phenomena are not contemplated by the standard theoretical framework of continuous intertemporal equilibrium. This paper's aim is to take a first step into the analysis of monetary policy in the context of ISI. First, a dynamic model of a flex-price, competitive economy is presented where ISI are allowed to develop. Second, upon introducing different types of Taylor rules, some indications for the conduct of monetary policy emerge, which are at variance with the standard view. Copyright © 2009 The Author. Journal compilation © 2009 Blackwell Publishing Ltd.

Suggested Citation

  • Roberto Tamborini, 2010. "Monetary Policy With Investment-Saving Imbalances," Metroeconomica, Wiley Blackwell, vol. 61(3), pages 473-509, July.
  • Handle: RePEc:bla:metroe:v:61:y:2010:i:3:p:473-509
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    Cited by:

    1. Grossi, Michele & Tamborini, Roberto, 2012. "Stock prices and monetary policy: Re-examining the issue in a New Keynesian model with endogenous investment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-47.
    2. Ronny Mazzocchi, 2013. "Scope and Flaws of the New Neoclassical Synthesis," DEM Discussion Papers 2013/13, Department of Economics and Management.
    3. Yılmaz, Engin & Süslü, Bora, 2015. "The Relation between Money, Interest and Consumption in Developing Countries: The Case of Turkey," MPRA Paper 68614, University Library of Munich, Germany.
    4. Ronny Mazzocchi, 2013. "Intertemporal Coordination Failure and Monetary Policy," DEM Discussion Papers 2013/15, Department of Economics and Management.
    5. Ronny Mazzocchi, 2013. "Investment-Saving Imbalances with Endogenous Capital Stock," DEM Discussion Papers 2013/14, Department of Economics and Management.
    6. Ronny Mazzocchi, 2013. "Monetary Policy when the NAIRI is unknown: The Fed and the Great Deviation," DEM Discussion Papers 2013/16, Department of Economics and Management.

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