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Necessity as the mother of invention: monetary policy after the crisis

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  • Alan Blinder
  • Michael Ehrmann
  • Jakob de Haan
  • David-Jan Jansen

Abstract

SUMMARYWe examine recent changes in monetary policy due to the financial crisis and ask whether they are likely to be temporary or permanent. We present evidence from two original surveys – one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted to new policies, to have had discussions about changing mandates, and to have communicated more extensively. But thinking has changed more broadly. For instance, many central banks in non-crisis countries also report implementing macro-prudential measures. Looking forward, we expect central banks to have broader mandates, use macro-prudential tools more widely, and communicate more actively than before the crisis. While there is no consensus yet about the usefulness of unconventional monetary policies, we expect most of them will remain in central banks’ toolkits, as governors who gain experience with a particular tool are more likely to assess that tool positively. Finally, the relationship between central banks and their governments might well have changed, with central banks “crossing the line” into the political realm more often than in the past.

Suggested Citation

  • Alan Blinder & Michael Ehrmann & Jakob de Haan & David-Jan Jansen, 2017. "Necessity as the mother of invention: monetary policy after the crisis," Economic Policy, CEPR;CES;MSH, vol. 32(92), pages 707-755.
  • Handle: RePEc:oup:ecpoli:v:32:y:2017:i:92:p:707-755.
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    Cited by:

    1. Richhild Moessner, 2018. "Effects of asset purchases and financial stability measures on term premia in the euro area," BIS Working Papers 721, Bank for International Settlements.
    2. van Riet, Ad, 2017. "Monetary Policy Stretched to the Limit: How Could Governments Support the European Central Bank?," MPRA Paper 83451, University Library of Munich, Germany.
    3. Thomas Lustenberger & Enzo Rossi, 2017. "Does Central Bank Transparency and Communication Affect Financial and Macroeconomic Forecasts?," Working Papers 2017-12, Swiss National Bank.
    4. David-Jan Jansen & Matthias Neuenkirch, 2017. "News consumption, political preferences, and accurate views on inflation," DNB Working Papers 549, Netherlands Central Bank, Research Department.
    5. Dimitris Christelis & Dimitris Georgarakos & Tullio Jappelli & Maarten van Rooij, 2016. "Trust in the Central Bank and Inflation Expectations," CSEF Working Papers 458, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. repec:ecb:ecbrbu:2017:0039:1 is not listed on IDEAS
    7. Yimin Xu & Jakob de Haan, 2016. "Does the Fed's unconventional monetary policy weaken the link between the financial and the real sector?," DNB Working Papers 529, Netherlands Central Bank, Research Department.
    8. Klingelhöfer, Jan & Sun, Rongrong, 2017. "Macroprudential Policy, Central Banks and Financial Stability: Evidence from China," MPRA Paper 79033, University Library of Munich, Germany.
    9. Donato Masciandaro & Davide Romelli, 2018. "Beyond the Central Bank Independence Veil: New Evidence," BAFFI CAREFIN Working Papers 1871, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    10. Yuriy Gorodnichenko & Walker Ray, 2017. "The Effects of Quantitative Easing: Taking a Cue from Treasury Auctions," NBER Working Papers 24122, National Bureau of Economic Research, Inc.
    11. Donato Masciandaro & Francesco Passarelli, 2018. "Populism, Financial Inequality And Central Bank Independence: A Political Economics Approach," BAFFI CAREFIN Working Papers 1874, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    12. Maarten van Rooij & Jakob de Haan, 2016. "Will helicopter money be spent? New evidence," DNB Working Papers 538, Netherlands Central Bank, Research Department.
    13. Dennis Bonam & Jakob de Haan & Beau Soederhuizen, 2017. "The effects of fiscal policy at the effective lower bound," DNB Working Papers 565, Netherlands Central Bank, Research Department.
    14. Masciandaro, Donato & Romelli, Davide, 2018. "Central bankers as supervisors: Do crises matter?," European Journal of Political Economy, Elsevier, vol. 52(C), pages 120-140.

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    JEL classification:

    • 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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