This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the US Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008 - 09. Unusually low interest rates in 2001 -...

The paper analyses the common European monetary policy based on a Mises-Hayek overinvestment framework, which is combined with the theory of optimum currency areas. It shows how since the turn of the millennium a too expansionary monetary policy contributed to unsustainable overinvestment booms...

In this paper, we examine the link between political transparency of a common central bank (CCB) and decentralized supply-side fiscal policies in a monetary union. We find that the opacity of a conservative CCB has a restrictive effect on national fiscal policies since each government...

The Target imbalances within the Eurozone can be interpreted as a sign of a missing balance of payments adjustment mechanism for the member countries. As the Eurozone lacks a fiscal union, in economic theory it is more an exchange rate union or a system of fixed exchange rates than a monetary...

The financial crisis of 2007-09 has led to a rethinking of the role of monetary and financial regulatory policy. It has also called into question the benefits of financial innovation and monetary policy that focuses solely on inflation and the output gap. This paper discusses financial...

Following the experience of the global financial crisis, central banks have been asked to undertake unprecedented responsibilities. Governments and the public appear to have high expectations that monetary policy can provide solutions to problems that do not necessarily fit in the realm of...

After the colossal financial crisis of 2008, many monetary policy analyses have shown the profound implications for financial stability of monetary policy in a liquidity trap. This paper investigates how monetary policy in a liquidity trap affects financial stability in a New Keynesian model...