Monetary Policy and Central Banking after the Crisis: The Implications of Rethinking Macroeconomic Theory

Abstract

The financial crisis of 2008 and the Great Recession have prompted a retrospective on the conduct of monetary policy and central banking (Bernanke, 2010). Before the crisis, economists and central bankers were in a celebratory mode, with talk about the “Great Moderation” and praise for advances in monetary economics that had helped stabilize the economy (Bernanke, 2004; Goodfriend, 2007; Blanchard, 2008): now, however, there is talk among policy insiders of need to rethink monetary policy.