scholarly journals Slow Post-financial Crisis Recovery and Monetary Policy

2019 ◽  
Vol 11 (4) ◽  
pp. 82-112
Author(s):  
Daisuke Ikeda ◽  
Takushi Kurozumi
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Slow Recovery ◽  
Strong Response ◽  
High Interest Rate ◽  
Output Stabilization ◽  
Interest Rate Volatility ◽  
Crisis Recovery ◽  
Monetary Policy Rule ◽  
Inflation Stabilization

Post-financial crisis recoveries tend to be slow and accompanied by slowdowns in total factor productivity (TFP) and permanent losses in GDP. To prevent them, how should monetary policy be conducted? We address this issue by developing a model with endogenous TFP growth in which an adverse financial shock can induce a slow recovery. In the model, a welfare-maximizing monetary policy rule features a strong response to output, and the welfare gain from output stabilization is much larger than when TFP expands exogenously. Moreover, inflation stabilization results in a sizable welfare loss, while nominal GDP stabilization works well, albeit causing high interest rate volatility. (JEL E12, E23, E32, E43, E44, E52, G01)

scholarly journals Slow Post-Financial Crisis Recovery and Monetary Policy

2018 ◽  
Vol 2018 (347) ◽  
Author(s):  
Daisuke Ikeda ◽  
◽  
Takushi Kurozumi ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Crisis Recovery

scholarly journals Modeling Macroeconomic Policymakers’ Interactions under Zero Lower Bound Environment: The New Keynesian Theoretical Approach

2019 ◽  
Vol 8 (1) ◽  
pp. 5-38 ◽  
Author(s):  
Aleksandra Praščević ◽  
Milutin Ješić
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Interest Rates ◽  
Regime Switching ◽  
New Keynesian ◽  
Zero Lower Bound ◽  
Output Stabilization ◽  
Theoretical Approaches ◽  
Inflation Stabilization ◽  
Implicit Coordination

Abstract The paper examines how the implicit coordination mechanisms between the policymakers could help in overcoming negative macroeconomic consequences which are provoked by the problem of zero lower bound (ZLB) on the nominal interest rates. For the long period of time, before the global recession started, the ZLB problem was not found to be interesting for researchers. Immediately after the crisis outbreak, more attention was put on that problem within different approaches since conventional monetary policy faced substantial limitation in overcoming business cycles. Many authors have proposed new unconventional measures in both monetary policy and fiscal policy sphere. The theoretical approaches to the ZLB problem include many different aspects. In the paper we chose to use regime switching models adjusted to simulate occasionally binding constraints in order to investigate different scenarios within the New Keynesian framework. We found that coordination between more passive monetary policymaker and more active fiscal policymaker is crucial in the ZLB environment. Central bank has to follow monetary policy rule in which both inflation stabilization and output stabilization have certain positive weight. However, credible policy-making which is supported by the relevant institutions is a necessary precondition for implicit coordination, which substantially decrease the losses occurred as a consequence of ZLB on interest rates.

scholarly journals Online Appendix to Slow Post-Financial Crisis Recovery and Monetary Policy

2018 ◽  
Vol 2018 (347) ◽  
Author(s):  
Daisuke Ikeda ◽  
◽  
Takushi Kurozumi ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Online Appendix ◽  
Crisis Recovery

Global Financial Crisis and Its Impact on Russia

2009 ◽  
pp. 9-27 ◽  
Author(s):  
A. Kudrin
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Central Bank ◽  
Global Financial Crisis ◽  
Developed Countries ◽  
Real Economy ◽  
Energy Prices ◽  
Russian Government ◽  
The Real

The article examines the causes of origin and manifestation of the current global financial crisis and the policies adopted in developed countries in 2007—2008 to deal with it. It considers the effects of the financial crisis on Russia’s economy and monetary policy of the Central Bank in the current conditions as well as the main guidelines for the fiscal policy under different energy prices. The measures for fighting the crisis that the Russian government and the Central Bank use to support the real economy are described.

Normative dimensions of central banking: How the guardians of financial markets affect justice

2017 ◽  
Author(s):  
Peter Dietsch
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Financial Markets ◽  
Central Banking ◽  
Democratic Legitimacy ◽  
Policy Agenda ◽  
Theory Of Justice ◽  
Introductory Section ◽  
The Impact

Monetary policy, and the response it elicits from financial markets, raises normative questions. This chapter, building on an introductory section on the objectives and instruments of monetary policy, analyzes two such questions. First, it assesses the impact of monetary policy on inequality and argues that the unconventional policies adopted in the wake of the financial crisis exacerbate inequalities in income and wealth. Depending on the theory of justice one holds, this impact is problematic. Should monetary policy be sensitive to inequalities and, if so, how? Second, the chapter argues that the leverage that financial markets have today over the monetary policy agenda undermines democratic legitimacy.

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