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Central bankers and the rationale for unconventional monetary policies: reasserting, renouncing or recasting monetarism?

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  • Brett Fiebiger
  • Marc Lavoie

Abstract

The purpose of this paper is to examine the rationale for the unconventional monetary policies adopted by central banks in response to the Global Financial Crisis. Quantitative easing appears to be a return to monetarist principles. Indeed, the Bank of England emphasised a causal chain running from increases in broad money to spending and inflation, while the Bank of Japan later pointed to a theorised relation between base money and expected inflation. Some aspects of monetarism have been renounced, albeit not necessarily with convincing reasoning. Monetarist principles can also be discerned in the ‘credit view’ associated with the research of two-term US Federal Reserve Chair, Ben Bernanke. An understanding of the banking system and the channels of monetary transmission is still a work in progress.

Suggested Citation

  • Brett Fiebiger & Marc Lavoie, 2021. "Central bankers and the rationale for unconventional monetary policies: reasserting, renouncing or recasting monetarism?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(1), pages 37-59.
    • Handle: RePEc:oup:cambje:v:45:y:2021:i:1:p:37-59.
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    File URL: http://hdl.handle.net/10.1093/cje/beaa035
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    Citations

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    Cited by:

    1. Hulya Dagdeviren & Jiayi Balasuriya & Christopher Nicholas, 2022. "Spatial dynamics of post-crisis deleveraging [Financial geography II: financial geographies of housing and real estate]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1225-1246.
    2. Romeo Victor Ionescu & Costinela Fortea & Monica Laura Zlati & Valentin Marian Antohi, 2023. "Studying Differing Impacts of Various Monetary Aggregates on the Real Economy," IJFS, MDPI, vol. 11(4), pages 1-22, December.
    3. Sergio Cesaratto, 2022. "Le frontiere della politica monetaria: aspetti didattici, teorici, di politica economica. Un review article (The frontiers of monetary policy: didactic, theoretical, economic policy aspects. A review ," Moneta e Credito, Economia civile, vol. 75(299), pages 353-373.
    4. Nina Eichacker, 2022. "Institutional constraints, liquidity provision, and endogenous money in the Eurozone core and periphery before and after crises: A preliminary comparison of the Eurozone Crisis and the Coronavirus Pan," PSL Quarterly Review, Economia civile, vol. 75(303), pages 403-424.
    5. Ábel, István & Losoncz, Miklós, 2022. "A pénzelmélet megújulása válságok idején [The renewal of monetary theory in times of crisis]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 451-479.
    6. Jakob Vestergaard & Daniela Gabor, 2021. "Central Banks Caught Between Market Liquidity and Fiscal Disciplining: A Money View Perspective on Collateral Policy," Working Papers Series inetwp170, Institute for New Economic Thinking.
    7. Yuki Tada & Kazuhiro Kurose, 2024. "The Pasinetti Index and the Rise of Inequality in the Age of Unconventional Monetary Policy in Japan," TERG Discussion Papers 488, Graduate School of Economics and Management, Tohoku University.

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