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Modern central banking from monetary perspective

Author

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  • Maciej Ryczkowski

    () (Nicolaus Copernicus University)

Abstract

Motivation: Cashless or DSGE models did not allow to predict the Great Recession — which may suggest that they omit some important variables like money or credit, for instance. Aim: The paper summarizes changing views on money’s importance in modern monetary policy and reviews pros and cons of assigning any special role to money by central banks. Results: On the basis of literature review and the 2007–2009 crisis experiences, author apposes arguments for possible improvements in monetary policy frameworks. The paper is organized as follows: section 1 reviews some basic facts about monetary aggregates, section 2 presents the methodology of the research, section 3 discusses pros and cons of assigning special relevance to money in central banking, section 4 concludes.

Suggested Citation

  • Maciej Ryczkowski, 2016. "Modern central banking from monetary perspective," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 15(4), pages 547-556, December.
  • Handle: RePEc:cpn:umkeip:v:15:y:2016:i:4:p:547-556
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    File URL: http://dx.doi.org/10.12775/EiP.2016.037
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    References listed on IDEAS

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    1. Adam S. Posen, 2006. "Why Central Banks Should Not Burst Bubbles," International Finance, Wiley Blackwell, vol. 9(1), pages 109-124, May.
    2. Laurence M. Ball & Niamh Sheridan, 2004. "Does Inflation Targeting Matter?," NBER Chapters,in: The Inflation-Targeting Debate, pages 249-282 National Bureau of Economic Research, Inc.
    3. Dieter Gerdesmeier & Hans‐Eggert Reimers & Barbara Roffia, 2010. "Asset Price Misalignments and the Role of Money and Credit," International Finance, Wiley Blackwell, vol. 13(3), pages 377-407, Winter.
    4. Fredrik NG Andersson, 2011. "Monetary Policy, Asset Price Inflation and Consumer Price Inflation," Economics Bulletin, AccessEcon, vol. 31(1), pages 759-770.
    5. David C. Black & Michael R. Dowd, 1994. "The Money Multiplier, the Money Market, and the LM Curve," Eastern Economic Journal, Eastern Economic Association, vol. 20(3), pages 301-310, Summer.
    6. John B Taylor, 2009. "The Need to Return to a Monetary Framework," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 44(2), pages 63-72.
    7. Mishkin, Frederic S., 2001. "From monetary targeting to inflation targeting : lessons from the industrialized countries," Policy Research Working Paper Series 2684, The World Bank.
    8. Michael Woodford, 2007. "The Case for Forecast Targeting as a Monetary Policy Strategy," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 3-24, Fall.
    9. Otmar Issing, 2009. "Asset Prices and Monetary Policy," Cato Journal, Cato Journal, Cato Institute, vol. 29(1), pages 45-51, Winter.
    10. Pedro Teles & Harald Uhlig & João Valle e Azevedo, 2016. "Is Quantity Theory Still Alive?," Economic Journal, Royal Economic Society, vol. 126(591), pages 442-464, March.
    11. Dewald, William G. & Haug, Alfred A., 2004. "Longer-term effects of monetary growth on real and nominal variables, major industrial countries, 1880-2001," Working Paper Series 382, European Central Bank.
    12. William R. White, 2006. "Is price stability enough?," BIS Working Papers 205, Bank for International Settlements.
    13. Milton Friedman, 2004. "Reflections on A Monetary History," Cato Journal, Cato Journal, Cato Institute, vol. 23(3), pages 349-351, Winter.
    14. Brzoza-Brzezina, Michał & Kolasa, Marcin & Makarski, Krzysztof, 2013. "The anatomy of standard DSGE models with financial frictions," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 32-51.
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    More about this item

    Keywords

    money; monetary aggregates; modern central banking;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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