Monetary policy and monetary crises

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Chapter 22 in The International Monetary System and the Theory of Monetary Systems, 2016, pp 217-227 from Edward Elgar Publishing

Abstract: Monetary policy must aim at curing possible monetary problems, but it is an illusion to believe that real problems (for instance, a low rate of real growth) can be solved by the use of monetary policy. Business cycles nowadays are mainly of monetary origin, as it has been stressed by the so-called ‘Austrian theory of the business cycle’. This theory explains how an excess of money creation and the corresponding excess of credit distribution by banks is creating distorsions in the structure of prices and the structure of production. Therefore, the harmful effects of an excess of money creation are not only inflation (implying costs which are studied in previous chapters), but economic distortions.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2016
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