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U.S. monetary policy in disarray

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  • Tatom, John A.

Abstract

Monetary policy became more difficult to characterize during and after the mortgage foreclose and financial crises because of a shift to a new credit policy focused on private sector credit and that relies on traditional commercial banking strategies. The new credit policy broke the tight link that had existed between Fed credit and its effective monetary base, the monetary base that affects monetary aggregates. The Fed has adopted an exit strategy, but the discretionary powers that it followed remain in place as does a mistaken policy on the payment of interest on excess reserves.

Suggested Citation

  • Tatom, John A., 2014. "U.S. monetary policy in disarray," Journal of Financial Stability, Elsevier, vol. 12(C), pages 47-58.
    • Handle: RePEc:eee:finsta:v:12:y:2014:i:c:p:47-58
    DOI: 10.1016/j.jfs.2013.05.004
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    3. Michael T. Belongia & Peter N. Ireland, 2013. "Instability: Monetary and Real," Boston College Working Papers in Economics 830, Boston College Department of Economics.
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    5. Michael T. Belongia & Peter N. Ireland, 2015. "Interest Rates and Money in the Measurement of Monetary Policy," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 33(2), pages 255-269, April.
    6. Peter Lewin, 2016. "Policy Design and Execution in a Complex World: Can We Learn from the Financial Crisis?," Advances in Austrian Economics, in: Studies in Austrian Macroeconomics, volume 20, pages 265-283, Emerald Group Publishing Limited.
    7. Dutkowsky, Donald H. & VanHoose, David D., 2018. "Interest on reserves and Federal Reserve unwinding," Journal of Economics and Business, Elsevier, vol. 97(C), pages 28-38.
    8. Papa Gueye Fam & Rachida Hennani & Nicolas Huchet, 2017. "U.S. Monetary Policy, Commodity Prices And The Financialization Hypothesis," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 20, pages 53-77, December.
    9. Belongia, Michael T. & Ireland, Peter N., 2017. "Circumventing the zero lower bound with monetary policy rules based on money," Journal of Macroeconomics, Elsevier, vol. 54(PA), pages 42-58.
    10. Michael T. Belongia & Peter N. Ireland, 2012. "Quantitative Easing: Interest Rates and Money in the Measurement of Monetary Policy," Boston College Working Papers in Economics 801, Boston College Department of Economics.
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    More about this item

    Keywords

    Monetary policy; Credit policy; Central banking; Milton Friedman; Business cycles;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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