GLIMS Journal of Management Review and Transformation

A Brief Review of New Neoclassical Synthesis of Monetary Policy

Taufeeq Ajaz¹

First Published 1 May 2023. https://doi.org/10.1177/jmrt.231161872

Article Information

Volume 2, Issue 1 March 2023

Corresponding Author:

Taufeeq Ajaz, Indian Institute of Foreign Trade, Kolkata Campus, Kolkata, West Bengal 700107, India.
Email: taufeeq@iift.edu

¹ Indian Institute of Foreign Trade, Kolkata Campus, Kolkata, West Bengal, India

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (http://www.creativecommons.org/licenses/by-nc/4.0/) which permits non-Commercial use, reproduction and distribution of the work without further permission provided the original work is attributed.

Abstract

This article reviews the central tenants of the New Neoclassical Synthesis of monetary policy. Starting with the optimising behaviour of central banks, this article reviews different theoretical developments like the role of expectations, the Taylor Principle, time-inconsistency, central bank independence and the importance of financial markets for monetary policy. The article concludes by highlighting the challenges faced by policymakers.

Keywords

Monetary policy, new neoclassical synthesis, inflation, output, expectations

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