An Endogenous Money Perspective on the Post-Crisis Monetary Policy Debate
Review of Keynesian Economics, Vol. 1 No. 2, Summer 2013, pp. 171-194
24 Pages Posted: 31 Dec 2012 Last revised: 1 Jul 2013
Date Written: December 29, 2012
A number of debates are taking place regarding the appropriate response of monetary policy both to the crisis and the Great Recession that followed, particularly in regard to interest on reserve balances and so-called unconventional monetary policy operations. This paper describes in detail an endogenous money perspective on the interactions between central bank operations and banks, and then shows that interest on reserve balances does not impede the transmission of monetary policy, while quantitative easing does not necessarily enhance it.
Keywords: endogenous money, central bank operations, interest on reserves, quantitative easing
JEL Classification: E4, E5, E6
Suggested Citation: Suggested Citation