2013 Reports

Monetary Policy Targets After the Crisis

Woodford, Michael

In the global financial crisis and its aftermath, central banks have undertaken unprecedented actions of many kinds. This raises a natural question: has the crisis revealed that the previous consensus framework for monetary policy was inadequate, and should now be fundamentally reconsidered? It is surely true that central banks were not too well prepared for the crisis, and that new policies had to be created to a large extent on the fly. And it would obviously be desirable to try to learn from this experience, in order to be better prepared for an appropriate response next time and perhaps even to reduce the probability of there being a “next time” as well.