Misdiagnosing the crisis: The real problem was not real, it was nominal

Scott Sumner, 10 September 2009

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Here is a puzzle. Almost everything we have learned from recent research in monetary history, theory, and policy points to the Federal Reserve as the cause of the crash of late 2008. More specifically, an extremely tight monetary policy in the US (and perhaps Europe and Japan) seems to have sharply depressed nominal spending after July 2008.

Topics: Macroeconomic policy
Tags: Central Banks, interest rates, monetary policy

The crisis and citizens’ trust in central banks

Daniel Gros, Felix Roth, 10 September 2009

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Central banks seem to be enjoying a “good crisis”. They have lowered interest rates to near zero and used unconventional approaches to stabilise financial systems.

Topics: Macroeconomic policy
Tags: Central Banks, trust

Are the Golden Years of Central Banking Over? The Crisis and the Challenges

The Editors, 17 July 2009

URL: http://www.cepr.org/pubs/books/CEPR/booklist.asp?cvno=P193
Topics: Global crisis, Monetary policy
Tags: Central Banks, global financial crisis

Preventing deflation

César Molinas, 1 April 2009

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In principle, there is nothing wrong with falling prices. As the argument goes, excess supply brings about lower prices, higher real money balances, lower interest rates and higher aggregate spending.

Topics: Macroeconomic policy
Tags: Central Banks, Gamma discounting, inheritance tax

The Fed, the Eurosystem, and the Bank of Japan: More similarities or differences?

Francesco Paolo Mongelli, Dieter Gerdesmeier , Barbara Roffia, 7 February 2009

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Central banks have always been important players in financial markets. They set key interest rates, which are at the origination of the monetary transmission process, they are monopoly suppliers of base money, and they perform a number of other tasks and functions.

Topics: Monetary policy
Tags: Central Banks, monetary policy frameworks

Central banks and financial crises: Lessons from recent Latin American history

Luis I. Jácome H., 3 January 2009

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Central banks have played an instrumental role in the current financial crisis in mature markets.

Topics: Monetary policy
Tags: banking crises, Central Banks, financial crisis, Latin America

The lender of last resort of the 21st century

Xavier Freixas, Bruno M. Parigi, 22 December 2008

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Since the creation of the first central banks in the 19th century, the existence of a lender of last resort (LOLR) has been a key issue for the structure of the banking industry. Banks finance opaque assets with a long maturity with short-lived liabilities – a combination that is vulnerable to sudden loss of confidence.

Topics: International finance
Tags: Central Banks, lender of last resort, systemic crises

Can optimal policy projections in DSGE models be useful for policymakers?

Jesper Lindé, Lars E.O. Svensson, Stefan Laséen, Malin Adolfson, 16 September 2008

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Over the last couple of years many central banks, for instance the ECB, the Federal Reserve Board, and Sveriges Riksbank, have started to build and estimate dynamic stochastic general equilibrium (DSGE) models, following the work by Christiano, Eichenbaum, and Evans (2005), and Smets and Wouters (2003).

Topics: Monetary policy
Tags: Central Banks, dynamic stochastic general equilibrium

Optimal central bank transparency

Carin van der Cruijsen, Sylvester Eijffinger, Lex Hoogduin , 12 August 2008

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In recent decades, both monetary theory and monetary policymakers have come to emphasise the importance of expectations for the transmission of monetary policy.1 The New Keynesian model – more particularly the Phillips curve embedded in it – explains current inflation by the output gap and expected future inflation.

Topics: Monetary policy
Tags: Central Banks, transparency

Central bank independence and transparency: Not just cheap talk (Part 2)

Christopher Crowe, Ellen E. Meade, 31 July 2008

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Using the updated measures of central bank independence and transparency that we detailed in our first column, we sought to investigate what effects these aspects of central bank governance might have on economic performance.1

Topics: Monetary policy
Tags: Central Banks, independence, transparency

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