Power or economic law? Fresh reflections on ECB policy

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Series Details Vol.53, No.3, May 2018, p.164-169
Publication Date May 2018
ISSN 0020-5346 (print) | 1613-964X (online)
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Conventional wisdom says that central banks determine interest rate levels. After all, monetary policy set by central banks directly influences money market conditions. But these conditions are also shaped by other actors such as government, manufacturing businesses, commercial banks and non-bank financial institutions, as well as by monetary developments abroad. In this paper, it is argued that market forces, such as a global saving glut, play a more important role in setting interest rates than central banks.

Source Link http://dx.doi.org/10.1007/s10272-018-0742-7
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