Document Type

Article

Publication Date

2-2021

Publication Title

Journal of Policy Modeling

Volume

43

Issue

1

Pages

15-33

Publisher Name

Elsevier

Abstract

The paper formulates the modeling of unconventional monetary policy and critically evaluates its effectiveness to address the Global Financial Crisis. We begin with certain principles guiding general scientific modeling and focus on Milton Friedman's 1968 Presidential Address that delineates the strengths and limitations of monetary policy to pursue certain goals. The modeling of monetary policy with its novelty of quantitative easing to target unusually high unemployment is evaluated by a Markov switching econometric model using monthly data for the period 2002–2015. We conclude by relating the lessons learned from unconventional monetary policy during the Global Financial Crisis to the recent bold initiatives of the Fed to mitigate the economic and financial impact of the Covid-19 pandemic on U.S. households and businesses.

Comments

Author Posting © Elsevier, 2021. This is the author's version of the work. It is posted here by permission of Elsevier for personal use, not for redistribution. The definitive version was published in Journal of Policy Modeling, Volume 43, Issue 1, January-February 2021. https://doi.org/10.1016/j.jpolmod.2020.07.001

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

Available for download on Wednesday, February 01, 2023

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