Can Monetary Policy Delay the Reallocation of Capital?
This chapter examines the medium-run effects of monetary policy and focuses its analyses on the consequences of distorted (in the sense of exogenously influenced) real interest rates that are currently observed in many industrialized countries. In our mod
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Fabian Schnell
Heterogeneity in Macroeconomics and its Implications for Monetary Policy With a foreword by Prof. Dr. Reto Föllmi
Fabian Schnell Universität St. Gallen St. Gallen, Switzerland Dissertation, University of St. Gallen, Switzerland, 2014
ISBN 978-3-658-09730-1 ISBN 978-3-658-09731-8 (eBook) DOI 10.1007/978-3-658-09731-8 Library of Congress Control Number: 2015937603 Springer Gabler © Springer Fachmedien Wiesbaden 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, speci¿cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on micro¿lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a speci¿c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer Gabler is a brand of Springer Fachmedien Wiesbaden Springer Fachmedien Wiesbaden is part of Springer Science+Business Media (www.springer.com)
Foreword The role that monetary policy plays in the real economy has been discussed for a long time in economics. The expansionary and non-orthodox monetary measures to fight the adverse consequences of the Great recession have reignited the interest into these questions. Monetary policy affects business cycles because the increased liquidity provided by the central bank does not immediately raise prices. What we still do not know precisely how much time this price adjustment needs and through which channels it operates. Fabian Schnell’s book provides a substantial contribution to a better understanding how business cycles evolve. In a first part, Fabian Schnell analyzes the macroeconomic effects of the low real interest rates we see today. The relevance of the topic could not be more obvious. The chapter speaks to an ongoing policy debate on the consequences of the present low-interest policy. There is already a broad literature on the short-run consequences of a zero interest rate environment but there is, surprisingly, little research on its medium- and long-run consequences. The data from inflationprotected bonds indeed show that US real interest rates for different yield lengths have experienced a secular downturn since the beginning of the Great recession in 2009. The author makes the empirically relevant assumption that fir
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