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U.S. Monetary Policy in Disarray

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  • John A. Tatom

Abstract

Monetary policy became more difficult to characterize during and after the mortgage foreclose and financial crises because of a shift to a new credit policy focused on private sector credit and that relies on traditional commercial banking strategies. The new credit policy broke the tight link that had existed between Fed credit and its effective monetary base, the monetary base that affects monetary aggregates. The Fed has adopted an exit strategy, but the discretionary powers that it followed remain in place as does a mistaken policy on the payment of interest on excess reserves.

Suggested Citation

  • John A. Tatom, 2011. "U.S. Monetary Policy in Disarray," NFI Working Papers 2011-WP-21b, Indiana State University, Scott College of Business, Networks Financial Institute, revised Feb 2013.
  • Handle: RePEc:nfi:nfiwps:2011-wp-21b
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    3. Michael T. Belongia & Peter N. Ireland, 2013. "Instability: Monetary and Real," Boston College Working Papers in Economics 830, Boston College Department of Economics.
    4. Michael T. Belongia & Peter N. Ireland, 2016. "Money and Output: Friedman and Schwartz Revisited," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(6), pages 1223-1266, September.
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    6. Michael T. Belongia & Peter N. Ireland, 2012. "Quantitative Easing: Interest Rates and Money in the Measurement of Monetary Policy," Boston College Working Papers in Economics 801, Boston College Department of Economics.
    7. Belongia, Michael T. & Ireland, Peter N., 2017. "Circumventing the zero lower bound with monetary policy rules based on money," Journal of Macroeconomics, Elsevier, vol. 54(PA), pages 42-58.
    8. Dutkowsky, Donald H. & VanHoose, David D., 2017. "Interest on reserves, regime shifts, and bank behavior," Journal of Economics and Business, Elsevier, vol. 91(C), pages 1-15.
    9. Dutkowsky, Donald H. & VanHoose, David D., 2018. "Interest on reserves and Federal Reserve unwinding," Journal of Economics and Business, Elsevier, vol. 97(C), pages 28-38.
    10. Dutkowsky, Donald H. & VanHoose, David D., 2018. "Breaking up isn’t hard to do: Interest on reserves and monetary policy," Journal of Economics and Business, Elsevier, vol. 99(C), pages 15-27.
    11. Peter Lewin, 2016. "Policy Design and Execution in a Complex World: Can We Learn from the Financial Crisis?," Advances in Austrian Economics, in: Steven Horwitz (ed.), Studies in Austrian Macroeconomics, volume 20, pages 265-283, Emerald Publishing Ltd.
    12. Oxana Afanasyeva & Dmitriy Korovin, 2020. "The impact of reserve requirements of central banks on macroeconomic indicators," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 413-429, September.

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    More about this item

    Keywords

    monetary policy; credit policy; central banking; Milton Friedman; business cycles;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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