Working Paper: NBER ID: w22735
Authors: Alan S. Blinder; Michael Ehrmann; Jakob de Haan; Davidjan Jansen
Abstract: We ask whether recent changes in monetary policy due to the financial crisis will be temporary or permanent. We present evidence from two surveys—one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted to new policies, to have had discussions about mandates, and to have communicated more. But the thinking has changed more broadly—for instance, central banks in non-crisis countries also report having implemented macro-prudential measures. Overall, we expect central banks in the future to have broader mandates, use macro-prudential tools more widely, and communicate more actively than before the crisis. While there is no consensus yet about the usefulness of unconventional monetary policies, we expect most of them will remain in central banks’ toolkits, as governors who gain experience with a particular tool are more likely to assess that tool positively. Finally, the relationship between central banks and their governments might well have changed, with central banks “crossing the line” more often than in the past.
Keywords: monetary policy; financial crisis; central banks; macroprudential policy
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| central banks in crisis countries (E58) | implemented new policies (D78) |
| necessity (D10) | broader mandates (E60) |
| necessity (D10) | increased use of macroprudential tools (E61) |
| changes in monetary policy (E52) | more active communication strategy (L96) |
| relationship between central banks and governments (E58) | shifted (Y60) |