ECONIS Select – Reassessing Central Banking

06/2010

Selected for the Global Economic Symposium 2010

During the past decades, a broad consensus among economists and policy-makers has emerged that inflation targeting by central banks leads to very good macroeconomic outcomes. The “Great Recession” has casted doubt on this conventional wisdom. Many policy-makers and analysts blame the loose monetary policy stance of the Federal Reserve to be one of the main causes for the meltdown of the financial system and the “Great Recession.” Before the financial crisis, most central banks focused on low and stable consumer price inflation and used short-term interest rates as the main tool to implement their inflation target. Monetary aggregates and the supervision of other prices (e.g., asset prices) usually played a minor role in the actual conduct of monetary policy. Although most central bank tackled the issue of systematic risk and banking, most of them did not treat price stability and banking supervision as comprehensive issues. Quite frequently, central banks had de facto iron walls between the respective departments or they shared the responsibilities for banking supervision with other government bodies.

• Will central banking be the same after the “Great Recession” as it was before?
• Should monetary policy react to housing markets and asset price bubbles?
• Are two or more pillars better than one?
• Are central banks the best banking supervisors?
• What are potential tensions between monetary policy and banking supervision?
• Are quantitative easing and other unconventional policies adequate instruments during (great) recessions?

These and other related issues will be the focus of the session “Reassessing Central Banking.”

Literature selected from our database ECONIS:

• Title: How central should the Central Bank be? / By Alan S. Blinder
  Published: Princeton, NJ: Center for Economic Policy Studies, 2009
  Subject heading: Central Bank / Monetary Policy / Open market operations / Banking supervision / Banking policy / Theory / United States
• Article: Central banks and financial crises / Willem H. Buiter
  In: Maintaining stability in a changing financial system. - [Kansas City, Mo.]. - 2009, S. 495-633
  Subject heading: Financial crisis / Central Bank / Monetary Policy
• Title: Financial stability frameworks and the role of central banks: lessons from the crisis / Erlend Walter Nier
  Published: Washington, DC: Internat. Monetary Fund, 2009
  Subject heading: Financial crisis / Central Bank / Monetary Policy / Banking supervision
  Link: http://www.imf.org/external/pubs/ft/wp/2009/wp0970.pdf
  Request info: - Available
• Article: Present and future in central banking / Salvatorangelo Loddo
  In: The European Union review. - Pavia: Consorzio Pavese per Studi Post-Universitari, ISSN 1606-8963, ZDB-ID 13617138. - Bd. 13.2008, 2/3, S. 7-23
  Subject heading: Central Bank / Monetary Policy / Lender of last resort / Banking supervision / Comparison / EU countries / United States / Japan
• Title: A tale of two policies : prudential regulation and monetary policy with fragile banks / by Ignazio Angeloni and Ester Faia
  Published: Kiel: Kiel Inst. for the World Economy, 2009
  Subject heading: Banking crisis / Bank liquidity / Banking supervision / New Basel Capital Accord / Capital adequacy rules / Capital structure / Monetary Policy / Shock / Monetary transmission / Theory
  Link: http://hdl.handle.net/10419/30044
• Article: Some lessons from the financial market crisis / Otmar Issing
  In: International finance. - Oxford: Wiley-Blackwell, ISSN 1367-0271, ZDB-ID 14061053. - Bd. 12.2009, 3, S. 431-444
  Subject heading: Financial crisis / Banking policy
• Title: A primer on unconventional monetary policy / Peter Bofinger and Sebastian Debes
  Published: London: Centre for Economic Policy Research, 2010
  Subject heading: Monetary Policy / Money creation / Shock / Credit policy / Financial crisis / Theory
• Title: Monetary ease: a factor behind financial crises?: Some evidence from OECD countries / Rudiger Ahrend
  Published: 2010
  Subject heading: Monetary Policy / Financial market / Financial crisis / Interest Rate / Taylor rule / Real estate price / Assets / Bubbles / OECD countries / 1985-2007
  Links:
  http://www.economics-ejournal.org/economics/journalarticles/2010-12
  http://hdl.handle.net/10419/30328
• Title: Interpreting the unconventional US monetary policy of 2007-09 / Ricardo Reis
  Published: Cambridge, Mass., 2010
  Subject heading: Financial crisis / Monetary Policy / Interest rate policy / Credit policy / Aggregate liquidity / United States / 2007-2009
  Link: http://www.nber.org/papers/w15662.pdf
  Request info: - On loan
• Title: Unconventional choices for unconventional times: credit and quantitative easing in advanced economies / Vladimir Klyuev, Phil de Imus, and Krishna Srinivasan
  Published: Washington, DC: Internat. Monetary Fund, 2009
  Subject heading: Financial crisis / Monetary Policy / World
  Link: http://www.imf.org/external/pubs/ft/spn/2009/spn0927.pdf
• Article: The limits of central bank policy: economic crisis and the challenge of effective solutions / Jamie Morgan
  In: Cambridge journal of economics. - Oxford: Oxford Univ. Press, ISSN 0309-166x, ZDB-ID 1317787. - Bd. 33.2009, 4, S. 581-608
  Subject heading: Monetary Policy / Taylor rule / Financial crisis / Interest rate policy / Aggregate liquidity
• Article: Should the Federal Reserve have responded to asset prices? / Jangryoul Kim and Sungjin Cho
  In: Seoul journal of economics. - Seoul: Univ., ISSN 1225-0279, ZDB-ID 10844120. - Bd. 23.2010, 1, S. 35-55
  Subject heading: Financial crisis / Monetary Policy / Policy rules / Impact analysis / United States / 1980-2008
• Article: Is monetary policy effective during financial crises? / by Frederic S. Mishkin
  In: The American economic review. - Nashville, Tenn.: American Economic Assoc., ISSN 0002-8282, ZDB-ID 203590x. - Bd. 99.2009, 2, S. 573-577
  Subject heading: Financial crisis / Monetary Policy / Impact analysis / United States / 2007-2008
• Article: Pricking bubbles in the wind: could central banks have done more to head off the financial crisis? / Howard Davies
  In: The Australian economic review. - Richmond, Vic.: Blackwell Publ. Asia, ISSN 0004-9018, ZDB-ID 8626844. - Bd. 42.2009, 4 (Dec.)=Nr.168, S. 387-396
  Subject heading: Financial crisis / Central Bank / Monetary Policy
• Article: Monetary policy and asset prices revisited / Donald L. Kohn
  In: Cato Institute: The Cato journal. - Washington, DC: Inst., ISSN 0273-3072, ZDB-ID 8759583. - Bd. 29.2009, 1, S. 31-44
  Subject heading: Financial crisis / Monetary Policy / Stock price / Bubbles / United States
• Title: The regulatory response to the financial crisis / Charles A. E. Goodhart
  Published: Cheltenham [u.a.]: Elgar, 2009
  Link: Table of contents
• Title: Monetary policy in exceptional times / Michele Lenza, Huw Pill and Lucrezia Reichlin
  Published: London: Centre for Economic Policy Research, 2010
  Subject heading: Financial crisis / Central Bank / Monetary Policy / Term structure of interest rates / EU countries / United Kingdom / United States / 2007-2009
  Link: http://www.cepr.org/pubs/dps/DP7669.asp
  Request info: - Available
• Title : Financial crises and the interest-rate approach to monetary policy / J. Stephen Ferris; Jack A. Galbraith
  Published: Ottawa, Ont.: Carleton Univ., Dep. of Economics, 2010
  Subject heading: Financial crisis / Interest rate policy / Monetary Policy
  Link: http://www2.carleton.ca/economics/ccms/wp-content/ccms-files/cep10-03.pdf
  Request info: - On loan
• Title: Lessons and policy implications from the global financial crisis / Stijn Claessens, Giovanni Dell'Ariccia, Deniz Igan, and Luc Laeven
  Published: Washington, DC: Internat. Monetary Fund, 2010
  Subject heading: Financial crisis / Banking supervision / Banking policy / Subprime mortgage / Private debt
  Link: http://www.imf.org/external/pubs/ft/wp/2010/wp1044.pdf
  Request info: - On loan
• Title: Monetary policy, housing booms and financial (im)balances / Sandra Eickmeier; Boris Hofmann
  Published: Frankfurt, M.: Dt. Bundesbank, 2010
  Subject heading: Monetary Policy / Monetary transmission / Real estate price / Private debt / Credit risk / Risk premium / Financial crisis / Estimation / United States / 2001-2006
  Link: http://www.bundesbank.de/download/volkswirtschaft/dkp/2010/201007dkp.pdf
• Title: Asset fire sales and credit easing / Andrei Shleifer; Robert W. Vishny
  Published: Cambridge, Mass., 2010
  Subject heading: Financial crisis / Central Bank / Monetary Policy / Aggregate liquidity / Credit policy / United States / 2009
  Link: http://www.nber.org/papers/w15652.pdf
  Request info: - Available
• Title: Monetary policy responses to the crisis and exit strategies / by Makoto Minegishi and Boris Cournède
  Published: Paris: Organisation for Economic Co-operation and Development, Economics Dep., 2010
  Subject heading: Monetary Policy / Financial crisis / OECD countries
  Link: http://www.olis.oecd.org/olis/2010doc.nsf/LinkTo/NT00000C9E/$FILE/JT03278895.PDF Request info: - Available
• Title: The monetary mechanics of the crisis / Jürgen von Hagen
  Published: Brussels, 2009
  Subject heading: Financial crisis / Monetary base / Monetary aggregate / Multiplier / Monetary Policy / Central Bank / EU countries
  Link : http://www.bruegel.org/uploads/tx_btbbreugel/pc_mon_mechanics_280809.pdf
• Title: Are all the sacred cows dead?: implications of the financial crisis for macro and financial policies / Asli Demirgüç-Kunt; Luis Servén
  Published: Washington, DC: World Bank, Development Research Group, Finance and Private Sector Team [u.a.], Jan. 2009
  Subject heading: Financial crisis / Monetary Policy / Fiscal Policy / Regulation / Influence of government / Bubbles / Capital controls
  Links:
  http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/01/05/000158349_ 20090105103551/Rendered/PDF/WPS4807.pdf
  http://dx.doi.org/10.1596/1813-9450-4807
• Title: Central bank response to the 2007 - 08 financial market turbulence: experiences and lessons drawn / Alexandre Chailloux, Simon Gray, Ulrich Klüh, Seiichi Shimizu, and Peter Stella
  Published: Washington, DC: Internat. Monetary Fund, 2008
  Subject heading: Monetary Policy / Financial crisis / World / 2007-2008
  Link: http://www.imf.org/external/pubs/ft/wp/2008/wp08210.pdf
  Request info: - Available
• Title: Crisis and responses: the Federal Reserve and the financial crisis of 2007 - 2008 / Stephen G. Cecchetti
  Published: Cambridge, Mass.: National Bureau of Economic Research, 2008
  Subject heading: Financial crisis / Aggregate liquidity / Monetary Policy / Central Bank / Banks balance sheet / United States / 2006-2007
  Link: http://papers.nber.org/papers/w14134.pdf
  Request info: - Available
• Title: Liquidity and asset prices: how strong are the linkages? / Christian Dreger; Jürgen Wolters
  Published: Berlin: DIW, 2009
  Subject heading: Aggregate liquidity / Shock / Real estate price / Stock price / Wealth effect / Spillover effect / Monetary Policy / United States / EU countries
  Links:
  http://www.diw.de/documents/publikationen/73/94897/dp860.pdf
  http://hdl.handle.net/10419/27383
• Title: Stages of the 2007/2008 global financial crisis: is there a wandering asset-price bubble? / Lucjan T. Orlowski
  Published: Kiel: Kiel Inst. for the World Economy, 18 Dec. 2008
  Subject heading: Financial crisis / Assets / Bubbles / Spillover effect / Contagion / Mortgage / Credit market / Money Market / Credit rating / Banking supervision / World / 2007-2008
  Link: http://hdl.handle.net/10419/27479
• Article: Should monetary policy respond to asset price bubbles?: revisiting the debate / Sushil Wadhwani
  In: National Institute of Economic and Social Research: National Institute economic review. - London: Sage, ISSN 0027-9501, ZDB-ID 2419002. - Bd. 206.2008, S. 25-34
  Subject heading: Bubbles / Financial market / Monetary Policy