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Monetary Policy, Interest Groups, Financial Crisis

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  • Kolozsi, Pál Péter

Abstract

The outbreak of the financial and economic crisis in 2007–2008 put an end to the previous consensus on monetary policy. The effects of monetary policy on redistribution have come to the foreground; the modelling and transparency of central bank deci-sions now require the development of an interpretive framework that allows the complex interpretation of monetary policy decisions in a social context. This paper uses the example of exchange rate policy to explain the effects of central bank decisions on economic variables, the impact of those effects on institutions, and feedback from interest groups on central bank decision-making. Based on Woolley’s typology, this paper considers each of the factors within and outside government, as well as structural and less embed-ded, non-structural factors that may influence central bank decision-making. The paper concludes that interest groups’ assertion of their interests is not in conflict with central bank independence; it merely serves to represent the preferences of society concerning monetary policy.

Suggested Citation

  • Kolozsi, Pál Péter, 2013. "Monetary Policy, Interest Groups, Financial Crisis," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(1), pages 35-52.
    • Handle: RePEc:pfq:journl:v:58:y:2013:i:1:p:35-52
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    File URL: https://unipub.lib.uni-corvinus.hu/8962/
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    References listed on IDEAS

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    1. repec:mtp:titles:026201761x-01 is not listed on IDEAS
    2. Blanchard, Olivier, 2012. "Monetary Policy in the Wake of the Crisis," MIT Press Book Chapters, in: Blanchard, Olivier J. & Romer, David & Spence, Michael & Stiglitz, Joseph E. (ed.), In the Wake of the Crisis: Leading Economists Reassess Economic Policy, edition 1, volume 1, chapter 1, pages 7-13, The MIT Press.
    3. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9je5hhe4q4 is not listed on IDEAS
    4. Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
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    Cited by:

    1. Nicholas Apergis & James E. Payne, 2018. "Monetary policy rules and the equity risk premium: Evidence from the US experience," Review of Financial Economics, John Wiley & Sons, vol. 36(4), pages 287-299, October.

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    More about this item

    Keywords

    monetary policy; macroeconomics; financial crisis; political economics; institutional economics;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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