Assets matter: New and old views of monetary policy

Stan Du Plessis ()

No 16/2012, Working Papers from Stellenbosch University, Department of Economics

Abstract: An extraordinary consensus on the goals and conduct of monetary has been undermined by the international financial crisis and the faltering recovery in many economies. There is an evident need to pay closer attention to developments of asset markets and in the financial sector, which has opened a discussion on the appropriate goals for monetary policy. Meanwhile central banks have employed controversial balance sheet operations to restore market stability and encourage economic recovery. This paper argues that both these developments reflect earlier concerns in monetary policy: prior to the modern consensus both balance sheet policies and an emphasis on financial stability were central concerns of monetary authorities and the future of monetary policy is likely to rhyme with its past.

Keywords: monetary policy; interest rate policy; balance sheet operations; financial stability (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac and nep-mon
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