Question

Leo Krippner, an economist at the Reserve Bank of New Zealand, publishes an 'Effective Monetary Stimulus' (EMS) measure, designed to gauge the stance of U.S. monetary policy. Go to the website http://www,rbnz.govt NZ/research-and-publications/research-programme/ additional-research/measures-of-the-stance-of-united states-monetary-policy and examine the EMS measure. Is monetary policy becoming tighter, or looser according to the measure?

Short answer

The monetary policy began to tighten with the effect of the effective monetary stimulus to the measure as described by Leo Krippner.

Step-by-step solution

Concept introduction.

Effective monetary stimulation is the fiscal stimulus that is designed to stimulate the economy during a recession.

Explanation of solution.

According to the effective monetary stimulus, during the lower bound period, the major unconventional monetary events took place which eased up the monetary policy for the period of $2007$ to $2012$ .

From $2012$ onwards the monetary policy began to tighten with the effect of the effective monetary stimulus as described by Leo Krippner.