Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94476
Authors: 
Schnabl, Gunther
Year of Publication: 
2012
Series/Report no.: 
Working Papers on Global Financial Markets 26
Abstract: 
The paper identifies based on the monetary overinvestment theories by Wicksell (1898), Mises (1912) and Hayek (1929) monetary policy mistakes in large industrial countries issuing international currencies. It its argued that a neglect towards monetary policy reform in a world dominated by financial markets has led to the erosion of the allocation and signaling function of the interest rate, which has triggered an excessive rise of the government debt and structural distortions in the world economy. The backlash of high government debt levels on monetary policy making is argued to have led to a hysteresis of the liquidity trap. In this context, monetary reform is discussed with respect to the exit from low interest rate and high debt policies, an adaption of monetary policy rules to financial market dominated economic development, and the displacement of the prevalent world monetary system. Enhanced competition between dollar and euro as international currencies moderated by East Asia is proposed to constitute a more stable international monetary system.
Subjects: 
Economic Instability
Credit Cycles
Monetary Policy
Hayek
Mises
Monetary Policy Rules
Monetary Policy Reform
Currency Competition
JEL: 
E42
E58
F33
F44
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
337.18 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.