Re-Normalize, Don’t New-Normalize Monetary Policy

Economics Working Paper W14109

Abstract:

This paper is a written version of a presentation given at the IMF Conference on Monetary Policy in the New Normal in Washington DC. It argues central banks should re-normalize monetary policy—including the de facto independence of policy—rather than new-normalize policy to some so called new normal. It focuses mainly on the United States and looks back to the time before the recent financial crisis.

Re-Normalize, Don’t New-Normalize Monetary Policy