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Policy Area Papers on Monetary policy



Assessing the G20’s Mutual Assessment Process: A MAP but Little Direction Assessing the G20’s Mutual Assessment Process: A MAP but Little Direction
Graham Bird, World Economics, June 2017
After the global economic and financial crisis, the G20 has tried to orchestrate an internationally coordinated approach to economic recovery. In late 2009, the Mutual Assessment Process (MAP) was introduced to minimize risk by reducing global economic imbalances and e ... More


The Political Limits of Independent Monetary Policy The Political Limits of Independent Monetary Policy
Colin Ellis, World Economics, September 2016
Central banks in advanced economies have adopted a number of less conventional policy measures since the onset of the financial crisis and great recession. However, the efficiency of these measures remains highly uncertain; and, if downside risks crystallize, more radic ... More


Japan’s Monetary Policy Misadventure Japan’s Monetary Policy Misadventure
Masanaga Kumakura, World Economics, June 2016
This paper argues that the Bank of Japan’s decision in April 2013 to formally adopt inflation targeting as the framework of its monetary policy and to embark on a programme of quantitative and qualitative monetary easing was misconceived. The aim of the policy to achiev ... More


The IMF’s Uneasy Excursion into the Euro Zone The IMF’s Uneasy Excursion into the Euro Zone
Graham Bird, World Economics, September 2015
Much of the evolutionary history of the International Monetary Fund reflects its responses to unanticipated events. The crisis in the Eurozone at the end of the 2000s was largely unexpected. For many years prior to the crisis, the IMF’s clientele had been made up of low ... More


What is Britain worth to the next generation? What is Britain worth to the next generation?
Angus Hanton, World Economics, June 2015
Government economic policy implicitly aims to build up useful reserves for future generations, or at least to not burden our children and grandchildren with unsustainable debt. Surprisingly, even though this must be an important policy objective, it is rarely discussed ... More


The Liquidity Consequences of the Euro Area Sovereign Debt Crisis The Liquidity Consequences of the Euro Area Sovereign Debt Crisis
William A. Allen & Richhild Moessner, World Economics, March 2013
We examine the liquidity effects of the euro area sovereign debt crisis on euro area banks as a group, on intra-euro area financial flows and on international liquidity. The lending capacity of the euro area banking system has been much weakened, despite the remarkable ... More


José De Gregorio on Howard Davies and David Green: Banking on the Future. The Fall and Rise of Central Banking José De Gregorio on Howard Davies and David Green: Banking on the Future. The Fall and Rise of Central Banking

World Economics, December 2010
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The IMF and the Challenges it Faces The IMF and the Challenges it Faces
Graham Bird & Dane Rowlands, World Economics, December 2010
From being widely seen in early 2008 as an institution in decline and irrelevant to many of the problems then facing the world economy, the International Monetary Fund (IMF) has more recently been presented as an international financial institution that is of essential ... More


To the editors of World Economics To the editors of World Economics
Tim Congdon
World Economics, June 2010
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F. Gerard Adams on David Wessel: In Fed We Trust F. Gerard Adams on David Wessel: In Fed We Trust

World Economics, March 2010
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Monetary Policy at the Zero Bound Monetary Policy at the Zero Bound: A discussion of the effectiveness of monetary policy, with comments on contributions from Keynes, Krugman and Bernanke
Tim Congdon, World Economics, March 2010
The main conclusion of the paper is that – even if bank lending to the private sector is falling (and destroying money balances) at a zero short-term interest rate – the monetary authorities can always increase the quantity of money (broadly defined to include all bank ... More


Michael C. Macchiarola on Stephen H. Axilrod: Inside the Fed – Monetary Policy and Its Management, Martin Through Greenspan to Bernanke Michael C. Macchiarola on Stephen H. Axilrod: Inside the Fed – Monetary Policy and Its Management, Martin Through Greenspan to Bernanke
Michael C. Macchiarola
World Economics, September 2009
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Quantitative Easing Quantitative Easing: Will it generate demand or inflation?
Colin Ellis, World Economics, June 2009
Central banks around the world have moved to cut interest rates to record lows, with many in advanced economies going further and embracing full quantitative easing – creating new money to inject into the economy. This paper examines why quantitative easing has been nec ... More


The Institutional Framework of the Gulf Central Bank The Institutional Framework of the Gulf Central Bank
Nasser H. Saidi & Fabio Scacciavillani, World Economics, March 2009
This paper discusses the viable alternatives for a suitable institutional and governance framework for the policymaking body presiding over the GMU. The authors review a series of alternatives, from the simplest one (i.e. a governors’ council formed by the governors of ... More


Perspectives on Inclusive Development Perspectives on Inclusive Development: Concepts, approaches and current issues
Michael Chibba, World Economics, December 2008
The pursuit of inclusive development raises numerous questions and challenges for academics, practitioners and policymakers. To demystify the subject and move towards addressing the challenges, this paper first highlights the concept of inclusive development. Next, t ... More


Challenging Times for UK Monetary Policy Challenging Times for UK Monetary Policy
Andrew Sentance, World Economics, March 2008
Global economic developments have recently thrown up two major challenges for the setting of UK monetary policy. The recent global financial turmoil threatens to reinforce the slowdown in the UK and globally. But rising energy and commodity prices will push up inflation ... More


Keynes in the Long Run Keynes in the Long Run
Robert Skidelsky, World Economics, December 2007
In the light of recent market volatility, this essay asks: is Keynes dead or alive? The broad conclusion is that while macroeconomic models are still used, very little survives of Keynes’s original theory. 'New Keynesians' have replaced his key concept of radical uncert ... More


Monetary Policy, Governance and Economic Development Monetary Policy, Governance and Economic Development: The Botswana experience
Michael Chibba, World Economics, September 2007
Botswana is at a crossroads, as economic growth has slowed significantly in recent years while social problems remain largely unresolved. Exacerbating this situation is a monetary policy in crisis as over a decade of generally high interest rates have failed to address ... More


What Future for Central Banks? What Future for Central Banks?
Howard Davies, World Economics, December 2006
Central banks around the world differ in their functions, size, efficiency and status. In this article, Sir Howard Davies, a former Deputy Governor of the Bank of England, discusses the development of central banking over the last few years, and where it might go in the ... More


Milton Friedman, 1912–2006 Milton Friedman, 1912–2006: Polemicist, scholar, and giant of twentieth–century economics
Brian Snowdon & Howard R. Vane, World Economics, December 2006
Milton Friedman is best known as the founding father and leading exponent of the monetarist school of macroeconomic thought, and for championing the case for the efficacy of free markets in a wide variety of contexts. Without doubt, Friedman’s ideas have influenced the ... More


Gold and Silver as Monetary Metals Gold and Silver as Monetary Metals: An overview
John Cooper, World Economics, June 2006
Commodity money systems, based upon gold or silver, provided relative economic stability for centuries. On the other hand, our modern paper money system, based upon unbacked government liabilities, is particularly vulnerable to abuse. The various financial crises during ... More


Monetary Policy, Macro-stability and Growth Monetary Policy, Macro-stability and Growth: South Africa’s recent experience and lessons
Janine Aron & John Muellbauer, World Economics, December 2005
There is greater appreciation now amongst economists of the negative effect of uncertainty on investment, growth and equality, especially when credit constraints are widespread. This implies an important linkage between the transparency and predictability of the policy ... More


Monetary Policy in an Uncertain World Monetary Policy in an Uncertain World
Charles Bean, World Economics, March 2005
In this article, Charles Bean, Bank of England Chief Economist and member of the Monetary Policy Committee, reviews and assesses the three types of uncertainty which affect monetary policymakers: uncertainty about the data; uncertainty about the nature and persistenc ... More


Monetarism: A Rejoinder Monetarism: A Rejoinder
Tim Congdon, World Economics, September 2004
Tim Congdon responds to the article by Thomas Mayer and Patrick Minford, ‘Monetarism: A Retrospective’ that appeared in World Economics, Vol. 5, No. 2 (April–June), 2004, pp. 147–185. ... More


Monetarism in Retrospect — and Prospect Monetarism in Retrospect — and Prospect
Andrew G Haldane, World Economics, September 2004
Andrew Haldane responds to the article by Thomas Mayer and Patrick Minford, ‘Monetarism: A Retrospective’ that appeared in World Economics, Vol. 5, No. 2 (April–June), 2004, pp. 147–185. ... More


Monetarism: A Response Monetarism: A Response
Meghnad Desai, World Economics, September 2004
Meghnad Desai responds to the article by Thomas Mayer and Patrick Minford, ‘Monetarism: A Retrospective’ that appeared in World Economics, Vol. 5, No. 2 (April–June), 2004, pp. 147–185. ... More


Monetarism Revisited Monetarism Revisited
Allan Meltzer, World Economics, September 2004
Allan Meltzer responds to the article by Thomas Mayer and Patrick Minford, ‘Monetarism: A Retrospective’ that appeared in World Economics, Vol. 5, No. 2 (April–June), 2004, pp. 147–185. ... More


Monetarism Monetarism: A retrospective
Thomas Mayer & Patrick Minford, World Economics, June 2004
This paper offers a retrospective on the monetarist debate started by Milton Friedman in the 1950s, discussing both monetarist theory and policy recommendations. While the inability to find a controllable monetary aggregate with a velocity that can be accurately pred ... More


Monetary Policy Monetary Policy: A subtle paradigm shift?
Claudio Borio & Philip Lowe, World Economics, June 2003
A growing challenge for central banks is to secure monetary and financial stability simultaneously. Indeed, somewhat paradoxically, success in controlling inflation can sometimes contribute to the development of imbalances that ultimately lead to financial stresses, ... More


Some Lessons from a Single Currency Some Lessons from a Single Currency
Alan J. Brown, World Economics, March 2003
This article looks at the early experience of the Euro and argues that both the original rules established for the European Central Bank and the Stability and Growth pact need to be reconsidered. Failure to do so will result in the whole European economy delivering l ... More


The UK’s Achievement of Economic Stability The UK’s Achievement of Economic Stability: How and why did it happen?
Tim Congdon, World Economics, December 2002
The UK achieved a remarkable degree of macro-economic stability in the 1990s. Contrary to expectations when the pound was expelled from the European exchange rate mechanism in September 1992, over the next ten years inflation was kept almost exactly on target and its ... More


James Tobin, 1918–2002 James Tobin, 1918–2002
An interview with introduction by Brian Snowdon & Howard Vane
World Economics, September 2002
Professor James Tobin, who died on 11 March 2002, was possibly the most eminent of the world’s ‘Keynesian’ economists. Described by Nobel Laureate Paul Samuelson as “the archetype of a late-twentieth century American scholar”, Tobin was without doubt one of the most ... More


Japan’s Monetary and Economic Policy Japan’s Monetary and Economic Policy
Allan Meltzer, World Economics, September 2002
Japan has gone from very successful policies that promoted growth without inflation to a long period of slow growth, recessions and deflation. The Bank of Japan’s policies are a major reason for deflation. Although the Bank has purchased foreign exchange, it counterac ... More


The Quest for Stability The Quest for Stability
Alan Budd, World Economics, September 2002
The UK seems to be enjoying a golden age of macroeconomic policy-making. Growth is steady; inflation is low and stable, and unemployment is low. After years of trying to achieve economic stability we seem to have found the answer. This paper explores the history of p ... More


Stock Markets and Central Bankers Stock Markets and Central Bankers: The economic consequences of Alan Greenspan
Stephen Wright, World Economics, March 2002
There is a near-consensus that central bankers should focus their attention on the control of inflation, and should accordingly not pay attention to movements in stock markets. This view is reinforced by the continuing influence of the Efficient Markets Hypothesis (EMH) ... More


Redefining the Role of the State Redefining the Role of the State: Joseph Stiglitz on building a ‘post-Washington consensus’
An interview with introduction by Brian Snowdon
World Economics, September 2001
An interview with introduction by Brian Snowdon
Professor Joseph Stiglitz is without question one of the world’s leading economists. In his extensive research he has made seminal contributions to the analysis of the economic consequences of incomplete informa ... More


On Understanding Money On Understanding Money
Martin Shubik, World Economics, March 2001
Fiat money is a creation of both the state and society. Its value is supported by expectations which are conditioned by the dynamics of trust in government, the socio-economic structure and by outside events such as wars, plagues or political unrest. The micro-manageme ... More