Necessity as the mother of invention monetary policy after the crisis

Necessity as the mother of invention:
Monetary policy after the crisis *
Alan Blinder a , Michael Ehrmann b , Jakob de Haan c,d,e , and David-Jan Jansen c
a Princeton University
b European Central Bank
c De Nederlandsche Bank
d University of Groningen
e CESifo
October 2016
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, central banks, surveys
JEL classifications: E52, E58
* Prepared for the 64th Panel Meeting of Economic Policy in Florence, 14-15 October 2016. The paper presents results from a
survey among heads of central banks and academic economists. We are very grateful for all their contributions. We also thank
the editors, our referees, Ben Bernanke, Chris Sims, Christiaan Pattipeilohy, Gabriele Galati, Jan Willem van den End, Klaus
Adam, Marcel Fratzscher, Mark Watson, Mervyn King, and Richhild Moessner as well as seminar and conference participants
at the Bank of Canada, de Nederlandsche Bank, the European Central Bank, the 48 th MMF Group Annual Conference, Brunel
University and the University of Lisbon for thoughtful comments. We thank Henk van Kerkhoff for statistical assistance. This
paper was written before the second author joined the European Central Bank. Views expressed in this paper do not necessarily
coincide with those of the European Central Bank, de Nederlandsche Bank, or the Eurosystem. The Managing Editor in charge
of this paper is Refet Gürkaynak.
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