money still matters aei panel march 22, 2013
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Money Still Matters AEI Panel March 22, 2013. David Beckworth, Western Kentucky University. Money Lessons Learned. Traditional View of Money too Narrow Retail Money Assets Cash, checking accounts, saving and time deposits, money market accounts Institutional Money Assets - PowerPoint PPT PresentationTRANSCRIPT
Money Still MattersAEI Panel
March 22, 2013David Beckworth, Western Kentucky
University
Money Lessons Learned
• Traditional View of Money too NarrowoRetail Money Assets• Cash, checking accounts, saving and time deposits, money market accounts
o Institutional Money Assets• Treasury bills, MBS, commercial paper, repos
Money Supply
Money Supply
Money Supply
Money Supply
Money Demand
Money Demand
Long-Term Interest Rates
Recap• Supply of Safe Assets Decreased• Demand for Safe Assets
Increased• Safe Asset Shortage • Transaction Asset or Money
Shortage• Shortfall of Total Dollar Spending
Role for Fed Policy• Return Total Dollar Spending to
Pre-crisis Growth PathoDemand for financial intermediation
will increaseoPrivate safe asset production will
increase• Don’t Target Money Supply
oEven though money still matters…oStable NGDP growth implies stable
monetary conditions
Role for Fed Policy
Vector Autoregression1968:Q4-2012:Q4
Quarters After Positive Shock to Expected NGDP Growth Rate