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The monetary mechanics of the crisis

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  • Jürgen von Hagen

Abstract

In response to the financial and economic crisis, central banks, unlike in the 1930s, have created enormous amounts of money. There are fears that this will lead to inflation, but it is base money (the central bank's liabilities) that has expanded; total monetary aggregates have not. By contrast, in the 1930s, base money remained stable and monetary aggregates dropped. The reason for this is that in a crisis the relationship...

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  • Jürgen von Hagen, 2009. "The monetary mechanics of the crisis," Policy Contributions 320, Bruegel.
    • Handle: RePEc:bre:polcon:320
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    References listed on IDEAS

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    1. Milton Friedman & Anna Jacobson Schwartz, 1970. "Monetary Statistics of the United States: Estimates, Sources, Methods," NBER Books, National Bureau of Economic Research, Inc, number frie70-1, July.
    2. Mr. Andre Meier, 2009. "Panacea, Curse, or Nonevent? Unconventional Monetary Policy in the United Kingdom," IMF Working Papers 2009/163, International Monetary Fund.
    3. John B. Taylor, 2009. "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong," NBER Working Papers 14631, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jürgen von Hagen & Jean Pisani-Ferry & Jakob von Weizsäcker, 2009. "A European Exit Strategy," Policy Briefs 328, Bruegel.
    2. Tatiana Damjanovic & Vladislav Damjanovic & Charles Nolan, 2017. "Liquidity Risk, Credit Risk and the Money Multiplier," Working Papers 2017_09, Business School - Economics, University of Glasgow.
    3. Stefan Behrendt, 2017. "Unconventional Monetary Policy Effects on Bank Lending in the Euro Area," Jena Economics Research Papers 2017-002, Friedrich-Schiller-University Jena.
    4. Agnès Bénassy-Quéré & Benoît Coeuré & Pierre Jacquet & Jean Pisani-Ferry, 2009. "The Crisis- Policy Lessons and Policy Challenges," Working Papers 358, Bruegel.
    5. Tatiana Damjanovic & Vladislav Damjanovic & Charles Nolan, 2016. "Risk Management and the Money Multiplier," CEGAP Working Papers 2016_03, Durham University Business School.
    6. Ansgar Belke, 2010. "Financial Crisis, Global Liquidity and Monetary Exit Strategies," Ruhr Economic Papers 0183, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Sieroń, Arkadiusz, 2019. "Endogenous versus exogenous money: Does the debate really matter?," Research in Economics, Elsevier, vol. 73(4), pages 329-338.
    8. Markus Pasche, 2010. "Interbank Lending and the Demand for Central Bank Loans - a Simple Microfoundation," Jena Economics Research Papers 2010-070, Friedrich-Schiller-University Jena.
    9. Belke, Ansgar, 2010. "Financial Crisis, Global Liquidity and Monetary Exit Strategies," Ruhr Economic Papers 183, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. repec:zbw:rwirep:0183 is not listed on IDEAS

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