Title: Monetary Policy since the 2007–2009 Financial Crisis
Abstract: Monetary policy is one of the two principal means (the other being fiscal policy) by which government authorities in a market economy regularly influence the pace and direction of overall economic activity, importantly including not only the level of aggregate output and employment but also the general rate at which prices rise or fall. This article updates the earlier article on 'Monetary Policy' (link) to take account of the extraordinary developments initially triggered by the 2007–09 worldwide financial crisis and then following in the aftermath of the crisis. With short-term interest rates in most advanced industrialized economies at or near zero, soon after the crisis began, central banks have been forced to seek out new ways of carrying out monetary policy. In part these new policy tools have involved heightened efforts to influence market participants' expectations of future monetary policy actions. In other respects they have involved an expanded role for a central bank's asset holdings, rather than its outstanding liabilities which had previously been the main focus of monetary policy. Both directions raise important questions about how monetary policy affects economic activity and how best to carry out this important aspect of economic policymaking.
Publication Year: 2015
Publication Date: 2015-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 1
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