Monetary Policy and Crisis

Chandana Ghosh () and Ambar Nath Ghosh ()
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Chandana Ghosh: Indian Statistical Institute
Ambar Nath Ghosh: Jadavpur University

Chapter 21 in Analytical Issues in Trade, Development and Finance, 2014, pp 371-379 from Springer

Abstract: Abstract This chapter argues that in times of crisis, the central bank’s conventional monetary policy of cutting interest rates in the face of declining output may be counterproductive. Instead of reversing the contraction in aggregate income, such a policy may reinforce the recessionary forces. The reason lies in the likely behaviour of saving and investment in times of crisis.

Keywords: Monetary policy; Crisis; Saving behaviour (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-81-322-1650-6_21

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DOI: 10.1007/978-81-322-1650-6_21

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