By Louis-Philippe Rochon, Salewa 'Yinka Olawoye
ISBN-10: 1781954119
ISBN-13: 9781781954119
Has the industrial and monetary difficulty replaced the way in which we behavior financial coverage? Is quantitative easing in line with the endogeneity of cash? those are yet of the questions this new booklet explores. a few of the participants provide fascinating and new views at the behavior of financial coverage in the course of the obstacle, and supply sharp feedback of valuable financial institution rules within the US and Europe.
Divided into components, this ebook provides a close, multi-faceted research of banking and fiscal coverage. the 1st half examines the position of relevant banks inside of an endogenous cash framework. those chapters tackle post-Keynesian rate of interest coverage, financial mercantilism, monetary industry association and constructing economies. within the moment a part of the ebook, the point of interest switches to the research of the monetary hindrance that started in 2007. The chapters during this part talk about the function of vital banks in occasions of crisis.
Monetary coverage and significant Banking is a needs to learn for all these attracted to the serious research of economic coverage. scholars and students of post-Keynesian economics, banking, and monetary crises will locate this e-book of specific relevance.
Contributors: A. Asensio, J. Bibow, R. Dimand, R. Guttmann, E. Kam, R. Koehn, M. Lavoie, E. Le Heron, N. Levy-Orlik, W. Mosler, S. Olawoye, L.-P. Rochon, M. Seccareccia, M. Setterfield, J. Smithin, D. Tropeano, okay. von Seekamm.
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Additional resources for Monetary Policy and Central Banking: New Directions in Post-Keynesian Theory
Example text
8 Second, we hypothesize that the commercial bank believes that an information asymmetry exists as between itself and the central bank – specifically, that the central bank has more and/or better information about the likely future state of the economy. Hence the commercial bank will raise its mark-up if the central bank cuts its overnight rate (qf , 0), because independently of its output expectations, the commercial bank will perceive a cut in f to be an indication of weakness in the general state of the economy, and hence an increase in the risk of default and the associated lender’s risk.
Successful policies therefore have to “take into account the unpredictable reactions of businessmen to those policies” (Bateman, 2003: 82). Quoting Keynes again, we are led to the conclusion that “a monetary policy which strikes public opinion as being experimental in character or easily liable to change may fail in its objective of greatly reducing the longterm rate of interest, because M2 may tend to increase almost without limit in response to a reduction of r below a certain figure” (Keynes, 1936: 203).
Our approach to modeling commercial bank behavior is similar to that of Palley (2008). Like Palley, we posit that q is sensitive to real output and to the animal spirits of the commercial bank. Unlike Palley, however, we overlook the influence of asset prices and the volume of loans on q, while taking into account the effects of inflation and the commercial bank’s reaction to central bank behavior. Of the two omissions mentioned above, the first is explained by the fact that our model does not include an asset market, and the second by the fact that we abstract from structuralist concerns with the response of commercial interest rates to the expansion of commercial banks’ loan portfolios (on which see, for example, Pollin, 1991).
Monetary Policy and Central Banking: New Directions in Post-Keynesian Theory by Louis-Philippe Rochon, Salewa 'Yinka Olawoye
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