Keyword: Monetary policy

Gerstenberger, Juliane; Schnabl, Gunther

Abstract

Gunther Schnabl and Juliane Gerstenberger analyse the impact of the Bank of Japan’s low-interest rate policy on the banking sector in the wake of the 1998 Japanese financial crisis. They provide evidence that the Japanese monetary policy has contributed to declining efficiency in the banking sector, despite – or possibly because of – the increasing concentration within this sector.

Keywords: Banking Sector, City Banks, concentration, Crisis Management, Japan, Monetary policy, regional banks, Shinkin Banks.

JEL Codes: E52, E58, E63, F42.

Erschienen in

Credit and Capital Markets – Kredit und Kapital, Bd. 54 (2021), Heft 4: S. 533–562.

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Gunther Schnabl; Nils Sonnenberg

Abstract

Gunther Schnabl and Nils Sonnenberg show that the ECB is weakening the profitability of banks while strengthening them in a way that allows it to implement policy goals with the help of commercial banks. Moreover, with the help of the negative interest rate policy, banks from the southern euro area, along with large banks that have struggled, tend to be propped up, but at the expense of banks in the northern euro area.

Keywords: Banking and credit, Blog, central banks, euro, European Union (EU), Featured Content, Gunther Schnabl, interest, Interest rate policy, low interest rate policy, Monetary policy, Monetary Policy and Finance, Nils Sonnenberg.

Erschienen in

Austrian Institute Paper No. 40-EN/2021.

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Thomas Mayer; Gunther Schnabl

Abstract

We compare the New Keynesian and Austrian explanations for low interest rates in the light of the Corona crisis. From a New Keynesian perspective low interest rates are the result of structural changes in the society and the economy as well as the cyclical downswing triggered by the Corona pandemic. In contrast, from the perspective of Austrian economic theory, interest rates have been pushed down on trend by central banks for a long time to stimulate growth, with the global financial crisis of 2007/08 and the Corona crisis of 2020 acting as powerful accelerators of the euthanasia of interest. New Keynesian theory would suggest that interest rates can be adjusted upward again when conditions change, without creating economic and financial disturbances. Against this, Austrian theory finds that central banks have backed themselves into a corner by creating persistent low-interest expectations.

Keywords: aging societies, central banks, Corona crisis, credit creation, global savings glut, Hansen, Hayek, Keynes, Mises, Monetary policy, secular stagnation, Summers.

JEL Codes: E12, E14, E32, E43.

Erschienen in

Journal of Policy Modeling Volume 43, Issue 6, November–December 2021, Pages 1241-1258.

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Karl-Friedrich Israel; Tim Florian Sepp; Nils Sonnenberg

Abstract

This article analyzes the impact of monetary policy on household saving in Japan between 1993 and 2017. Using annual data from the Japan Panel Survey of Consumers it is shown that monetary expansion has contributed to a widening gap in households’ net saving through an adverse effect on the volume of saving of non-academic households. In contrast, households with at least one academic tend to be able to compensate these adverse effects of monetary expansion or can even benefit from it. The article documents how inequality in terms of the ability to build up wealth has increased in Japan over the past decades. The statistical analysis controls for household size as well as potential spatial effects in the transmission mechanism of monetary policy on household saving.

Keywords: household saving, inequality, interest rate, Japan, Monetary policy.

JEL Codes: D31, D63, E52, E58.

Erschienen in

Applied Economics, 1-17.

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Taiki Murai; Gunther Schnabl

Abstract

The paper analyses the role of fiscal and monetary policy for the development of the current account imbalances in the euro area, including the most recent developments during the coronavirus crisis. Several financial transmission channels such as international bank lending, changes in TARGET2 balances, international rescue credit and government bond purchases of euro area central banks are identified. It is found that differing fiscal policy stances which have interacted differently with the ECB’s monetary policy have been at roots of first diverging and then converging current account positions in the euro area. Since the European financial and debt crisis, public financing mechanisms and the unconventional monetary of the ECB have contributed to the persistence of intra-euro area current account imbalances.

Keywords: current account, current account imbalances, EU, euro, European Monetary Union, financial account, fiscal policy, Monetary policy, TARGET2.

JEL Codes: F320, F330, F420, H620.

Erschienen in

CESifo Working Paper No. 9153.

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Kristoffer J. M. Hansen

Abstract

There have been many calls for reforming the gold standard since the end of the classical gold standard and especially since the end of Bretton Woods. While these calls have somewhat abated in recent years, this article will attempt to show that the gold standard is still a superior monetary system, and that the reform of the monetary system is still a desirable policy.
We will proceed by first analyzing the shortcomings of the present fiat-money order, indicating how it distorts the market and society through inflation, redistribution, by artificially increasing the importance of financial markets, and by hampering US industrial production in international trade. Then we will show that these problems would cease to exist under the gold standard, and we will indicate a possible reform for returning to gold in the US. Finally, we will argue that such a reform in order to be successful must become a popular crusade—i.e., it must become a populist issue.

Keywords: austrian economics, gold standard, Monetary policy, populism.

Erschienen in

Journal of Libertarian Studies Volume 24, No. 2 (2020): 323–361.

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Gunther Schnabl; Taiki Murai

Abstract

The bursting of the Japanese bubble economy in the early 1990s put the stage for a lasting lowzero-, and negative-interest rate environment, which fundamentally changed the business environment for the Japanese commercial banks. On the income side, with interest margins becoming increasingly depressed, net interest revenues declined, which forced the banks to expand revenues from fees and commissions. The banks had to cut costs by reducing the number of employees, closing branches and merging into larger banks. The gradual concentration process has most recently cumulated in the relaxation of the monopoly law. With the capital allocation function of banks being undermined, the Japanese economy has become zombified, suffering from anemic growth.

Keywords: Bank of Japan, banks, concentration, financial repression, interest margin, Japan, Monetary policy, regional banks.

JEL Codes: E50, E52, G21.

Erschienen in

Working Paper, No. 169.

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Karl-Friedrich Israel; Gunther Schnabl

Abstract

Since the 1980s inflationary pressures seem to materialize overproportionately outside of the sectors of consumer goods and services. We combine the Harmonized Index of Consumer Prices with indices for asset prices, such as stocks and real estate, as well as the costs of public goods to develop alternative inflation measures in Germany since the introduction of the euro. Real economic growth as well as median wage developments are reexamined in light of the alternative inflation estimates. Both turn out to be negative over the past decade in the most pessimistic scenarios.

Keywords: assets prices, costs of public goods, Germany, harmonized index of consumer prices, hidden inflation, inflation, inflation targeting, Monetary policy, real economic growth, real wages.

JEL Codes: E310, E520, E580, O110.

Erschienen in

CESifo Working Paper No. 8583.

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Gunther Schnabl; Nils Sonnenberg

Abstract

The paper analyses in light of Austrian and Keynesian economic theory the impact of conventional and unconventional monetary policies as therapies for financial crises. It compares the financial market stabilization measures of the Federal Reserve System and the European System of Central Banks in response to the US subprime crisis and the European financial and debt crisis. It is shown that the Federal Reserve System’s crisis measures were more directed towards stabilizing the banking system, whereas the European Central Bank had a stronger focus on the stabilization of the debt affordability of euro area crisis countries. In both cases, household credit growth remained under control despite renewed monetary expansion, while new imbalances emerged in the corporate sector. In the euro area, loose monetary policy had a destabilizing impact on the financial sector.

Keywords: financial crisis, Financial cycles, financial stability, Hayek, Keynes, Monetary policy.

JEL Codes: B53, E12, E14, E30, E44, E58, G10, G20, H30, H50.

Erschienen in

Working Paper, No. 166.

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Karl-Friedrich Israel; Sophia Latsos

Abstract

This paper analyzes the impact of conventional and unconventional monetary policy on income inequality in Japan, using hitherto unexplored data from the Japan Household Panel Survey. Empirical evidence shows that expansionary monetary policy in Japan has contributed to diminishing the gender pay gap through an increase in working time of women relative to men, but also to increasing the education pay gap. These effects may have materialized via the aggregate demand channel and the labour productivity channel. In contrast, expansionary monetary policy has had no significant impact on the development of the age pay gap.

Keywords: income inequality, Japan, low interest rate policy, Monetary policy, unconventional monetary policy.

JEL Codes: D31, D63, E52, E58.

Erschienen in

Applied Economics Volume 52, 2020 - Issue 40.

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