Advanced Search
MyIDEAS: Login

Does the stock of money have any causal significance?

Contents:

Author Info

  • Philip Arestis

    (Levy Economics Institute of Bard College, Annandale-on-Hudson (USA))

  • Malcolm Sawyer

    ()
    (The University of Leeds, Leeds University Business School, Economics Division, Leeds (Great Britain))

Abstract

Recent developments in macroeconomics, and economic policy in general, have produced a "new consensus" economy-wide model, in which the stock of money doesnot play any causal role. The stock of money operates a mere residual in the economic process. The absence of the stock of money in many current debates over monetary policy has prompted the statement by the Governor of the Bank of England (during his time as the Deputy Governor) that it is ironic that as central banks became more and more concerned with price stability, less and less attention is paid to money. Indeed, the decline of interest in money appeared to have coincided with low inflation in a significant number of countries. This has prompted a number of contributions that, wittingly or perhaps unwittingly, have attempted to "reinstate" a more substantial role for money in this "new" macroeconomics. In this paper we wish to argue that these attempts to "reinstate" money in current macroeconomic thinking entails two important problems.The first is that they contradict an important theoretical property of the new "consensus" macroeconomic model, namely that of dichotomy between the monetary and the real sector. The second is that some of these attempts either fail in terms of their objective, or merely reintroduce the problem rather than solving it. We conclude that if money is to be given a causal role in the "new" consensus model, then a great deal of more substantial research would be necessary.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9895/9777
Download Restriction: no

Bibliographic Info

Article provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.

Volume (Year): 56 (2003)
Issue (Month): 225 ()
Pages: 113-136

as in new window
Handle: RePEc:psl:bnlqrr:2003:22

Contact details of provider:
Web page: http://www.economiacivile.it

Order Information:
Web: http://www.economiacivile.it

Related research

Keywords: Macroeconomics; Monetary Policy; Monetary; Money; Policy;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ben Bernanke & Mark Gertler, 1999. "Monetary policy and asset price volatility," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 17-51.
  2. Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 1-15, February.
  3. Philip Arestis & Malcolm Sawyer, 2003. "The Nature and Role of Monetary Policy When Money Is Endogenous," Economics Working Paper Archive wp_374, Levy Economics Institute.
  4. Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
  5. Laurence H. Meyer, 2001. "Does money matter?," Review, Federal Reserve Bank of St. Louis, issue May, pages 1-16.
  6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  7. Scott Hendry, 1995. "Long-Run Demand for M1," Macroeconomics 9511001, EconWPA.
  8. David Romer, 2000. "Keynesian Macroeconomics without the LM Curve," NBER Working Papers 7461, National Bureau of Economic Research, Inc.
  9. Ben S. Bernanke & Mark Gertler & Mark Watson, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
  10. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
  11. Philip Arestis & Malcolm Sawyer, 2002. "Can Monetary Policy Affect The Real Economy?," Macroeconomics 0209012, EconWPA.
  12. Cottrell, Allin, 1994. "Post-Keynesian Monetary Economics," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 587-605, December.
  13. Philip Arestis & Malcolm Sawyer, 2002. "The Bank of England Macroeconomic Model: Its Nature and Implications," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(4), pages 529-545, July.
  14. Laidler, David, 1999. "The Quantity of Money and Monetary Policy," Working Papers 99-5, Bank of Canada.
  15. Heinz-Peter Spahn, 2001. "On the theory of interest rate policy," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 54(219), pages 355-380.
  16. Bennett T. McCallum, 2001. "Monetary Policy Analysis in Models Without Money," NBER Working Papers 8174, National Bureau of Economic Research, Inc.
  17. Arestis, Philip & Howells, Peter, 1996. "Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'," Cambridge Journal of Economics, Oxford University Press, vol. 20(5), pages 539-51, September.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Pablo García, & Rodrigo O. Valdés, 2004. "Monetarism Beyond M1A," Working Papers Central Bank of Chile 262, Central Bank of Chile.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:psl:bnlqrr:2003:22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlo D'Ippoliti).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.