Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons

Auteur : Fredj Jawadi, William Barnett

This volume presents recent analyses of monetary policies and central bank actions in the context of the recent global financial crisis. The first part discusses standard monetary policies and inflation targeting rules. Those approaches were appropriate to reaching two main objectives during the Great Moderation: controlling inflation and accommodating economic growth. But the end of the Great Moderation revealed the inadequacy of such monetary policies. Those conventional monetary policies have declined in relevancy during the rapid development of financial and credit markets. Speculative bubbles, revealing financial instabilities, resulted in a credit crunch, a global financial crisis, and economic depression for major economies. The second part of the book focuses on the non-conventional monetary policies introduced recently by several central banks to improve the conduct of their monetary actions. In particular, new monetary rules and variations of usual monetary rules are documented. Besides the well-known targets of monetary policy (inflation, unemployment, and economic growth), these new rules often target asset prices to moderate the development of financial markets and the volatility of financial cycles. The second part of the book also investigates the effects of non-conventional monetary policies on developing and emerging economies and issues of alternative finance. Keywords: Financial crisis, central banks, monetary policy, financial markets, non-conventional monetary policies

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