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Monetary policy under financial turbulence: an overview
The financial crisis that started in 2007 brought the global economy to the brink and in many respects it is still unfolding especially in Europe. How to understand and deal with the crisis has naturally been the subject of fierce debates that continue today. However some consensus appears to be ...
Changing inflation dynamics, evolving monetary policy: an overview
Understanding the dynamics of inflation has become an important challenge for both policymakers and researchers over the past decade. Empirical models linking inflation and economic activity—versions of the so-called Phillips curve—have failed...
Imperfect knowledge and the pitfalls of optimal control monetary policy
Sixty years ago, Milton Friedman questioned the usefulness of the optimal control approach because of policymakers’ imperfect knowledge of the economy and favored instead a simple rule approach to monetary policy (1947, 1948). These are still live issues, despite the development of powerful techniques ...
International risk spillovers: implications for emerging markets’ monetary policy frameworks with an application to Chile
Among the factors behind international spillovers, U.S. monetary policy developments retain a major influence. Such developments
drive the global financial cycle as strongly demonstrated by Rey (2013), Miranda-Agrippino and Rey (2020), Miranda-Agrippino and
Rey (2021). The dramatic U.S. monetary ...
Commodity prices and macroeconomic policy: and overview
World commodity prices and their macroeconomic impact especially on emerging economies have long been a main concern in economic research. Decades ago the Prebisch-Singer hypothesis of secularly deteriorating terms of trade (Prebisch 1950 Singer 1950) was the subject of intense debate and became a ...
Monetary policy under uncertainty and learning: an overview
Central bank economists and academic economists conducting research on the design of monetary policy have made significant advances in recent years. This work has led to a clearer understanding of the desirable properties of interest rate rules, the role of announcements and communication, and the ...
Macroeconomic and financial stability: an overview
On September 2008 Lehman Brothers filed for bankruptcy and the world became aware that the financial crisis that had been unfolding for months was far more serious than expected. Months later it became clear that the financial crisis of 2008-2009 was the worst economic downturn since the Great Depression ...
Central banks going long
Long-term interest rates have for long played an ambiguous role in the operation of monetary policy. The Federal Reserve Act of 1913 that created the Federal Reserve set the monetary policy objective to be: '... to promote effectively the goals of maximum employment stable prices and moderate long-term ...
Public trust and central banking
Central bank independence is one of the most remarkable pieces of institutional architecture fostered by economic thinking in the last half century. Theoretical studies in the 1980s stressed central bank independence as a precondition to bringing...
Heterodox central banking
In response to the current global crisis the U.S. Federal Reserve and other central banks around the world have implemented diverse policy measures including purchasing a wide range of securities lending to financial institutions intervening in foreign exchange markets and paying interest on reserves. ...