Necessity As the Mother of Invention Monetary Policy after the Crisis

64 Pages Posted: 12 Oct 2016

See all articles by Alan S. Blinder

Alan S. Blinder

Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Michael Ehrmann

European Central Bank (ECB); Bank of Canada

Jakob de Haan

University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute); De Nederlandsche Bank

David-Jan Jansen

De Nederlandsche Bank ; Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

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Date Written: October 10, 2016

Abstract

We ask whether recent changes in monetary policy due to the financial crisis will be temporary or permanent. We present evidence from two surveys — one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted to new policies, to have had discussions about mandates, and to have communicated more. But the thinking has changed more broadly — for instance, central banks in non-crisis countries also report having implemented macro-prudential measures. Overall, we expect central banks in the future to have broader mandates, use macro-prudential tools more widely, and communicate more actively than before the crisis. While there is no consensus yet about the usefulness of unconventional monetary policies, we expect most of them will remain in central banks’ toolkits, as governors who gain experience with a particular tool are more likely to assess that tool positively. Finally, the relationship between central banks and their governments might well have changed, with central banks “crossing the line” more often than in the past.

Keywords: monetary policy; central banks; surveys

JEL Classification: E52; E58

Suggested Citation

Blinder, Alan S. and Ehrmann, Michael and de Haan, Jakob and Jansen, David-Jan, Necessity As the Mother of Invention Monetary Policy after the Crisis (October 10, 2016). De Nederlandsche Bank Working Paper No. 525, Available at SSRN: https://ssrn.com/abstract=2850962 or http://dx.doi.org/10.2139/ssrn.2850962

Alan S. Blinder (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER)

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Michael Ehrmann

European Central Bank (ECB) ( email )

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Bank of Canada ( email )

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Jakob De Haan

University of Groningen - Faculty of Economics and Business ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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De Nederlandsche Bank ( email )

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David-Jan Jansen

De Nederlandsche Bank ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

HOME PAGE: http://sites.google.com/site/djansenresearch

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

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Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

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Rotterdam, 3062 PA
Netherlands

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