EconPapers    
Economics at your fingertips  
 

Market disequilibrium, monetary policy, and financial markets: insights from new tools

Jean-Luc Gaffard () and Mauro Napoletano ()

No 21, Sciences Po publications from Sciences Po

Abstract: We revisit the main building blocks of the theoretical models underlying the monetary policy consensus before the Great Recession. We highlight how the failure of these models to prevent the crisis and to provide guidance during the recession were due to the excessive confidence in the ability of markets to coordinate demand and supply, and to the neglect of the role of finance. Furthermore, we outline the main elements of an alternative approach to monetary policy that put emphasis on the processes driving coordination in markets, and on the externalities transmitted by financial inter-linkages. Many elements of this new approach are captured by new classes of models, namely, agent-based and financial network models. We discuss some insights from these models for the conduct of monetary policy, and for its interactions with fiscal and macroprudential policies.

Keywords: Output-inflation dynamics; New keynesian models; Disequilibrium analysis; Agent based models; Fiscal monetary policy interactions; Quantitative easing policies (search for similar items in EconPapers)
JEL-codes: E31 E32 E5 E61 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-knm, nep-mac, nep-mon and nep-pke
Date: 2018-06
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://spire.sciencespo.fr/hdl:/2441/3tl6t49e929f ... rium-mnapoletano.pdf (application/pdf)

Related works:
Working Paper: Market disequilibrium, monetary policy, and financial markets: insights from new tools (2018) Downloads
Working Paper: Market disequilibrium, monetary policy, and financial markets: insights from new tools (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spo:wpmain:info:hdl:2441/3tl6t49e929fla0aa2ukppot8n

Access Statistics for this paper

More papers in Sciences Po publications from Sciences Po Contact information at EDIRC.
Bibliographic data for series maintained by Spire @ Sciences Po Library ().

 
Page updated 2019-10-14
Handle: RePEc:spo:wpmain:info:hdl:2441/3tl6t49e929fla0aa2ukppot8n