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Monetarism Beyond M1A

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  • Pablo García,
  • Rodrigo O. Valdés

Abstract

This work analyzes, from an empirical standpoint, the information contained in the M1A aggregate in Chile and compares it with other aggregates. The findings reveal that, at least for now, the M1A aggregate does not seem to have particularly valuable information that would make it a better indicator of inflationary pressures within the monetary policy decision horizon. This is consistent with the practice that central banks followed in the past, when they used quantitative targets for money and focused their analyses on broader aggregates. One possible explanation for the excessive importance given in Chile to the monetary aggregate M1A is the history of financial repression that the country lived until the mid-seventies.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 262.

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Date of creation: May 2004
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Handle: RePEc:chb:bcchwp:262

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  8. Hallman, Jeffrey J & Porter, Richard D & Small, David H, 1991. "Is the Price Level Tied to the M2 Monetary Aggregate in the Long Run?," American Economic Review, American Economic Association, vol. 81(4), pages 841-58, September.
  9. Eric M. Leeper & Jennifer E. Roush, 2003. "Putting 'M' back in Monetary Policy," NBER Working Papers 9552, National Bureau of Economic Research, Inc.
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  11. Se Kyu Choi-Ha & Luis Felipe Lagos, 2003. "El Dinero como Indicador Líder," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(120), pages 259-283.
  12. Klaus Schmidt-Hebbel & Matías Tapia, 2002. "Monetary Policy Implementation and Results in Twenty Inflation-Targeting Countries," Working Papers Central Bank of Chile 166, Central Bank of Chile.
  13. Rodrigo Valdés, 1998. "Efectos de la Política Monetaria en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(104), pages 97-125.
  14. Bennett T. McCallum, 2001. "Monetary Policy Analysis in Models Without Money," NBER Working Papers 8174, National Bureau of Economic Research, Inc.
  15. De Grauwe, Paul & Polan, Magdalena, 2001. "Is Inflation Always and Everywhere a Monetary Phenomenon?," CEPR Discussion Papers 2841, C.E.P.R. Discussion Papers.
  16. Jose De Gregorio, 2003. "Dinero e Inflación: ¿En Qué Estamos?," Working Papers Central Bank of Chile 201, Central Bank of Chile.
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