Monetarism rides again? US monetary policy in a world of Quantitative Easing

Vo Phuong Mai Le, David Meenagh and A. Patrick Minford

No E2014/22, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This paper gives money a role in providing cheap collateral in a model of banking,besides the Taylor Rule, monetary policy can affect the risk-premium on bank lending to firms by varying the supply of M0, so at the zero bound monetary policy is effective,fiscal policy crowds out investment via the risk-premium. A rule for making M0 respond to credit conditions can enhance the economy s stability. Both price-level and nominal GDP targeting rules for interest rates combined with this stabilise the economy further. With these rules for monetary control, aggressive and distortionary regulation of banks balance sheets becomes redundant.

Keywords: DSGE model; Financial Frictions; Crises; Indirect Inference; money supply; QE; monetary policy; fiscal multiplier; zero bound (search for similar items in EconPapers)
JEL-codes: C1 E3 E44 E52 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2014-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://carbsecon.com/wp/E2014_22.pdf (application/pdf)

Related works:
Journal Article: Monetarism rides again? US monetary policy in a world of Quantitative Easing (2016)
Working Paper: Monetarism rides again? US monetary policy in a world of Quantitative Easing (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2014/22

Access Statistics for this paper

More papers in Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section Contact information at EDIRC.
Bibliographic data for series maintained by Yongdeng Xu ().