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Does Financial Dominance Explain the Recent Rise in Inflation?

Winkler Adalbert ()
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Winkler Adalbert: Frankfurt School of Finance & Management, Frankfurt am Main, Germany

The Economists' Voice, 2022, vol. 19, issue 2, 165-181

Abstract: This paper addresses the question whether the recent rise in inflation can be explained by financial dominance. It is motivated by the fact that the monetary policy response has been slow and timid which might have reflected concerns that a proper response would have triggered substantial financial risks. We find that a misjudgement of aggregate supply conditions provides a better explanation than financial dominance arguments. Still, recent policy moves such as the Transmission Protection Instrument by the European Central Bank and asset purchases by the Bank of England indicate that financial dominance concerns might become more pressing with further monetary tightening.

Keywords: financial dominance; monetary policy; globalization (search for similar items in EconPapers)
JEL-codes: E44 E52 E58 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1515/ev-2022-0025

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