Policy Article

New Perspectives on Monetary Policy


  • Schularick
  • M.
Publication Date

This paper presents and discusses new perspectives on the framework of monetary policy that challenge the current paradigm: (i) The development of heterogeneous agent models in which “divine coincidence” no longer holds and trade-offs between inflation and output stabilization arise; (ii) New theoretical and empirical evidence on the distributional effects of conventional and unconventional monetary policy; (iii) Evidence that stabilization policy by central banks invites more leverage, risktaking and a rising exposure of intermediaries to the systematic risks that central banks insure, which in turn increases financial and economic fragility.

Kiel Institute Expert


JEL Classification
E42, E52, E58, E64, H63

Key Words

  • asset prices
  • Central Banks' mandate
  • heterogeneous agent model
  • inequality
  • monetary policy
  • stabilization policy