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Monetary policy on interest rates: a retrospective analysis since Thornton

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  • Sylvie Diatkine

Abstract

In response to the affirmation by certain authors and critics of a recent return to an interest-rate policy that, in their opinion, resembles a throwback to the nineteenth century theory of monetary policy on interest rates, I pose the question of the difficulties of interest-rate policy in a retrospective analysis beginning with the current that founded the short-term interest rate policy within classical analysis and by focusing my discussion on several key authors (Thornton, Banking School, Bagehot, Wicksell, Keynes, contemporary authors such as Woodford). To this end, I study the importance that the interbank money market plays for these authors, which determines the target rate for the central bank.

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  • Sylvie Diatkine, 2013. "Monetary policy on interest rates: a retrospective analysis since Thornton," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 20(5), pages 715-740, October.
    • Handle: RePEc:taf:eujhet:v:20:y:2013:i:5:p:715-740
    DOI: 10.1080/09672567.2011.653881
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    References listed on IDEAS

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    1. repec:ucp:bkecon:9780226519999 is not listed on IDEAS
    2. Bindseil, Ulrich, 2004. "Monetary Policy Implementation: Theory, past, and present," OUP Catalogue, Oxford University Press, number 9780199274543.
    3. Tooke, Thomas, 1844. "An Inquiry into the Currency Principle," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number tooke1844.
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