This book explores the evolution of U.S. monetary doctrines and practices during the Great Moderation (c.1985-2005). In the first half of this period, policy was mainly concerned with the threat of inflation. The wish to build reputational capital as credible inflation fighters was high on the list of priorities. As the Great Moderation became entrenched in the minds of policymakers and economists, the gains were perceived as more permanently realized. At the same time, new challenges arose both within the domestic economy and the global financial system. The Federal Reserve under the leadership of Alan Greenspan (1987-2006) developed an approach to monetary policy based on the notions of preemption and risk management. The main thesis is that policy moved from a bias toward preemptive tightening to fully contain inflation, to an approach characterized by preemptive easing when perceived downside risks appear, related to financial fallouts and the threat of deflation.
We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries’ (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries.
There is growing recognition that prolonged monetary policy easing of major economies can have extraterritorial spillovers, driving up financial system leverage in other countries.
This open access book provides a readable narrative of the bubbles and the banking crisis Japan experienced during the two decades between the late 1980s and the early 2000s.
Effective risk management should then concentrate on preemptive tightening and not on pre-emptive easing. This holds in particular against the background of the analysis of boom-bust cycles that highlights.
From the President to the Federal Reserve Chairman, Alan Greenspan to Wall Street to the role of the emerging technologies, Woodward uses his exhaustive investigative technique to reveal the ideas and politics that have changed the lives of ...
Given expectations of further increases in asset prices, the tightening required ... for the bubble to collapse and then adopt traditional monetary easing to deal with the aftermath instead of preemptive tightening during an upswing.
If the monetary authority tightens so early that inflation never rises , the preemptive strike is a resounding ... Precisely these criticisms of the Fed's tightening in 1994-1995 and subsequent easing in 1995-1996 were heard in the ...
He suggested that 'monetary policy should be more focused on “preemptive tightening” to moderate credit bubbles than on “pre-emptive easing” to deal with the after effects' (p 1).The government in early 2010 seemed to ...
If that were the ductive policy targets and ease its anti - inflationary case , then the Fed's preemptive tightening would not stance to a more reasonable level . Monetary policy impair the recovery , but put it on a stronger footing ...
The idea is for the Fed to tighten its policy stance preemptively when aggregate demand growth exceeds growth in potential supply and is ... Conversely, the Fed acts to ease its policy stance when an undesirable weakening in economic ...