Slow Post-Financial Crisis Recovery and Monetary Policy

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)

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

10.24149/gwp347appx ◽

2018 ◽

Vol 2018 (347) ◽

Author(s):

Daisuke Ikeda ◽

◽

Takushi Kurozumi ◽

Keyword(s):

Monetary Policy ◽

Financial Crisis ◽

Online Appendix ◽

Crisis Recovery

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Global Financial Crisis and Its Impact on Russia

Voprosy Ekonomiki ◽

10.32609/0042-8736-2009-1-9-27 ◽

2009 ◽

pp. 9-27 ◽

Cited By ~ 9

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.

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(Monetary Policy Operating Frameworks of Major Central Banks after the Global Financial Crisis)

SSRN Electronic Journal ◽

10.2139/ssrn.2580628 ◽

2015 ◽

Author(s):

Byoung-Ki Kim ◽

Insu Kim

Keyword(s):

Monetary Policy ◽

Financial Crisis ◽

Global Financial Crisis ◽

Central Banks ◽

The Global Financial Crisis

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

10.1093/oso/9780198755661.003.0010 ◽

2017 ◽

Cited By ~ 1

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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Conclusions

10.1093/oso/9780198797173.003.0008 ◽

2017 ◽

Author(s):

Yilmaz Akyüz

Keyword(s):

Monetary Policy ◽

Financial Crisis ◽

Interest Rates ◽

Global Financial Crisis ◽

Developing Economies ◽

Quantitative Easing ◽

Unconventional Monetary Policy ◽

Advanced Economies ◽

The Global Financial Crisis ◽

Zero Bound

The preceding chapters have examined the deepened integration of emerging and developing economies (EDEs) into the international financial system in the new millennium and their changing vulnerabilities to external financial shocks. They have discussed the role that policies in advanced economies played in this process, including those that culminated in the global financial crisis and the unconventional monetary policy of zero-bound interest rates and quantitative easing adopted in response to the crisis, as well as policies in EDEs themselves....

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