Le, Vo Phuong Mai, Meenagh, David and Minford, Patrick
2016.
Monetarism rides again? US monetary policy in a world of quantitative easing.
Journal of International Financial Markets, Institutions and Money
44
, pp. 85-102.
10.1016/j.intfin.2016.04.011
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Abstract
In a model of banking we give money a role in providing cheap collateral; i.e. besides the Taylor Rule, monetary policy can affect the risk-premium by varying the supply of M0 in open market operations, so that even at the zero bound monetary policy is still effective, and fiscal policy still crowds out investment. A simple rule for making M0 respond to credit conditions can substantially enhance the economy's stability. This, in combination with Price-level or nominal GDP targeting rules for interest rates, stabilises the economy further, making aggressive and distortionary regulation of banks' balance sheets redundant.
Item Type: | Article |
---|---|
Date Type: | Publication |
Status: | Published |
Schools: | Advanced Research Computing @ Cardiff (ARCCA) Business (Including Economics) |
Subjects: | H Social Sciences > HB Economic Theory |
Publisher: | Elsevier |
ISSN: | 1042-4431 |
Date of First Compliant Deposit: | 28 April 2016 |
Date of Acceptance: | 27 April 2016 |
Last Modified: | 24 Nov 2020 20:57 |
URI: | http://orca-mwe.cf.ac.uk/id/eprint/90099 |
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