IDEAS home Printed from https://ideas.repec.org/a/wej/wldecn/791.html
   My bibliography  Save this article

Can Money Turn Bad News into Good News?

Author

Listed:
  • Jan Libich

Abstract

Over the past two decades, monetary policy has been used in unprecedented ways for macroeconomic and financial sector stabilization. This article argues that monetary policy, especially the unconventional measures (quantitative easing) implemented in the post-2008 period, has likely contributed to major financial imbalances (asset bubbles). Markets started responding to bad news about the economy’s fundamentals by stock price increases as if it was good news: in anticipation that loose monetary measures (injections of liquidity) would continue. This has important policy implications for the debate whether/how monetary and macroprudential policies should address asset price developments, very relevant during the current COVID-19 pandemic.

Suggested Citation

  • Jan Libich, 2020. "Can Money Turn Bad News into Good News?," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 21(2), pages 165-182, April.
    • Handle: RePEc:wej:wldecn:791
    as

    Download full text from publisher

    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=791
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Prasanna Gai & Sherry X. Wu, 2023. "On Market‐Friendly Central Bankers," The Economic Record, The Economic Society of Australia, vol. 99(325), pages 238-252, June.
    2. Jan Libich & Liam Lenten, 2022. "Hero or villain? The financial system in the 21st century," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 3-40, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wej:wldecn:791. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ed Jones (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.