Richard A. Werner

A Half-century Diversion of Monetary Policy?

The financial crisis of 2007–08 triggered monetary policies designed to boost nominal demand. A key aim of these policies was to boost the quantity of bank credit to the non-financial corporate and household sectors. A study by Richard A. Werner and his co-authors conducts a long-overdue horse race between the various policy contenders in terms of their ability to account for observed nominal GDP growth, using a half-century of UK data since 1963. Vector auto-regression and vector error correction modelling shows the real economy credit growth variable to be strongly exogenous to nominal GDP growth. Policy-makers are hence right to emphasise the role of bank credit, although they need to disaggregate it and specifically target bank credit for GDP transactions.

During his stay at Ifo, Mr. Werner will focus on banking and the economy, looking into data sources for research on German co-operative banks and Sparkassen. His aim is to examine empirically their role in stable and sustainable long-term economic growth in Germany, also utilising empirical evidence on the role of banks in economic growth in Germany over the last 200 years.

Mr Werner is Subject Editor of the International Review of Financial Analysis as well as the Journal of International Financial Markets, Institutions and Money. He is also Series Editor of the Palgrave Macmillan Series on Economics and Banking. He is Convenor of the Association for Research on Banking and the Economy (ARBE) and organiser of the European Conference on Banking and the Economy (ECOBATE). (The 2016 event on 12 October 2016 is currently calling for papers.)

Richard Werner is Chair in International Banking and Director of the Centre for Banking, Finance and Sustainable Development at the Southampton Business School of the University of Southampton. He is also a member of Linacre College, University of Oxford. He previously served at Visiting Professor at the University of Frankfurt and Lomonosov Moscow State University as well as having an appointment as Assistant Professor at Sophia University, Tokyo. He holds a D Phil from the University of Oxford.