Reflections of the New Economy on the Monetary Policy and Central Banking
In: Proceedings of the Conference on Human and Economic Resources
Developments in the knowledge and communication technologies have been causing significant changes on the working mechanisms of the economy both at the national and international areas. Some of the developments can be indicated as follows: the dramatic increasing of capital movements amongst nations; the speeding of global economic integration; the effects of world’s financial markets; the creation of new payment mechanisms; the decreasing of transaction and knowledge costs; getting the information in a permanent and fast way; the fluctuations in financial markets; increasing potential growth and productivity rates. It is possible to summarize the mentioned developments with the concept of “new economy” and also the effects of new economy within two main categories like microeconomic and macroeconomic effects. In this paper, monetary policies of new economy and its reflections on central banking are examined with regard to the macroeconomic effects of the new economy. In fact, it can not be said that the works carried out, in this area, in the economics literature has a long history. However, it should also be indicated that, as with other subjects of economics, an accepted common view on which direction the new economy will affect monetary policies and central banking has not been created. The views based on studies can be divided into two main groups: The first one is the group of economists who support the idea that the new economy does not constitute any changes relating to monetary policies and central banking. The second one is the group of economists who argue that the new economy can cause vital changes on monetary policies and central banking. This paper, first of all deals with the results of studies which explore the potential reflections of the new economy on monetary policies and central banking. In addition, the evaluation concerning the future of the monetary policies being implemented in Turkey is also provided in light of the studies carried out in this context.
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