Monetary Policy After the Coronavirus Crisis

Arkadiusz Sieroń ()
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Arkadiusz Sieroń: Uniwersytet Wrocławski

A chapter in The Austrian School of Economics in the 21st Century, 2022, pp 177-190 from Springer

Abstract: Abstract In response to the global coronavirus crisisGlobal coronavirus crisis, central banksCentral Banks all over the world have cut interest rates and introduced other measures to ease monetary policy. The aim of this chapter is to analyze this response, how it changed compared with their response to the global financial crisisGlobal financial crisis of 2007–2009, and how monetary policy might evolve further. In particular, I examine the adequacy of aggregate demand management and interest rate cuts in reference to the global coronavirus crisisGlobal coronavirus crisis and the potential economic impact of the interest rates staying lower for longer. I argue that setting interest rates too low for too long can impair their signaling and allocation functions and cause significant harm in the long run, such as misallocation of resources, excessive risk-taking, zombification of the economy, and accumulation of too much debt.

Keywords: Austrian economics; COVID-19 pandemic; Global coronavirus crisis; Global financial crisis; Ultralow interest rates (search for similar items in EconPapers)
JEL-codes: B53 E32 E43 E52 I18 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-031-08502-4_8

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DOI: 10.1007/978-3-031-08502-4_8

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