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Central Banking before the Great Recession
- Source :
- Oxford Scholarship
- Publication Year :
- 2018
- Publisher :
- Oxford University Press, 2018.
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Abstract
- The chapter describes the historical process as well as the analytical and empirical factors that, at the end of the twentieth century, led to the dominance, in advanced economies, of a central bank model based on an independent institution devoted to price stability as its overriding objective. The central bank pre-crisis model was elegant, performing, and efficient. However, it could not easily accommodate the pursuit of a traditionally important central bank objective: financial stability. Indeed, since central banks have, in essence, just one tool, that is, the interest rate, the pursuit of a financial stability objective in addition to a price stability objective could create dilemma situations. In the two decades between the mid-1980s and the mid-2000s, the economies of advanced economies were very stable, and this period was thus identified as Great Moderation. However, subsequent experience showed that, in this period, the crisis was incubating.
- Subjects :
- Economics
Financial system
Great recession
Subjects
Details
- Database :
- OpenAIRE
- Journal :
- Oxford Scholarship
- Accession number :
- edsair.doi...........f78f731bd6b83b37ac796ca73c3eb4ab