Le, Vo Phuong Mai ORCID: https://orcid.org/0000-0003-3374-9694, Meenagh, David ORCID: https://orcid.org/0000-0002-9930-7947 and Minford, Patrick ORCID: https://orcid.org/0000-0003-2499-935X 2016. Monetarism rides again? US monetary policy in a world of quantitative easing. Journal of International Financial Markets, Institutions and Money 44 , pp. 85-102. 10.1016/j.intfin.2016.04.011 |
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Abstract
In a model of banking we give money a role in providing cheap collateral; i.e. besides the Taylor Rule, monetary policy can affect the risk-premium by varying the supply of M0 in open market operations, so that even at the zero bound monetary policy is still effective, and fiscal policy still crowds out investment. A simple rule for making M0 respond to credit conditions can substantially enhance the economy's stability. This, in combination with Price-level or nominal GDP targeting rules for interest rates, stabilises the economy further, making aggressive and distortionary regulation of banks' balance sheets redundant.
Item Type: | Article |
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Date Type: | Publication |
Status: | Published |
Schools: | Advanced Research Computing @ Cardiff (ARCCA) Business (Including Economics) |
Subjects: | H Social Sciences > HB Economic Theory |
Publisher: | Elsevier |
ISSN: | 1042-4431 |
Date of First Compliant Deposit: | 28 April 2016 |
Date of Acceptance: | 27 April 2016 |
Last Modified: | 18 Jan 2024 16:45 |
URI: | https://orca.cardiff.ac.uk/id/eprint/90099 |
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