Tools of monetary policy and problems of them working properly: Unconventional monetary policy

This essay hasn't yet been marked by one of our teachers

You can view 1 essay on Political & International Economics that have been Marked by Teachers

The first 200 words of this essay...

"Tools of monetary policy and problems

of them working properly:

Unconventional monetary policy"

The recent crisis one more time revealed the importance and complexity of the financial sector of the economy and the problem of its proper regulation. The crash of Lehman brothers marked the failure of the financial system in its existing form. Nowadays there are heated debates about the future of the world financial system in the political and academic circles. In this context the topic of my essay is seen to be very important and pressing. The monetary authorities all over the world got a chance to test their latest developments in monetary policy in practice.

Although the idea that the money supply affects the real economy came to people`s mind in the middle of XVIII century it was the subject of ideological controversy among economic schools for a long time. The "classics" proposed the principles of neutrality of money that is changes in monetary variables affect only nominal variables (price level, nominal wages, etc.) but don`t change the real variables (output, employment, etc.). Partly as a result of such underestimation the monetary policy was not popular with politicians until 1960s since