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The use of money and credit measures in contemporary monetary policy


  • Chris Bloor
  • Chris Hunt
  • Tim Ng
  • Hamish Pepper

    (Reserve Bank of New Zealand)


The changing interaction between economic and financial developments around the world is prompting lively debate in the academic and central banking community about the use of money and credit measures in contemporary monetary policy formulation. Currently, money and credit measures generally have a fairly low, but arguably increasing, profile in the panoply of models and economic indicators used in central banks’ assessments of the economic outlook. Some prominent academics and central banks advocate increased emphasis on money and credit measures. In this view, credit developments in particular can materially enrich our understanding of the economic outlook when financial asset markets and the price of credit risk are moving substantially. At the same time, there are prominent sceptics on the specific value of money in understanding and predicting inflation. In New Zealand monetary policy formulation, we tend to focus on disaggregated credit measures, and mostly to provide corroborating information about particular developments in the various sectors of the economy. Increasing international financial integration and a greater emphasis on the interaction between financial stability assessment and monetary policy may see increased use and profile of credit measures in the future.

Suggested Citation

  • Chris Bloor & Chris Hunt & Tim Ng & Hamish Pepper, 2008. "The use of money and credit measures in contemporary monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 71, March.
  • Handle: RePEc:nzb:nzbbul:march2008:2

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    References listed on IDEAS

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    6. Stefan Gerlach & Janet Kong, 2005. "Money and Inflation in China," Working Papers 0504, Hong Kong Monetary Authority.
    7. Alfred Wong & Arthur Grimes, 1991. "The New Zealand monetary aggregates," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 54, december.
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    9. John Tait, 1989. "The use of monetary aggregates as monetary policy indicators," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 52, December.
    10. Siklos, Pierre L. & Eckhold, Kelly R., 1997. "Income Velocity in Turbulent Times: The Role of Institutional Factors in the New Zealand Experience," Journal of Macroeconomics, Elsevier, vol. 19(1), pages 31-52, January.
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    Cited by:

    1. Philip Gunby & Stephen Hickson, 2016. "Is Cash Dead? Using Economic Concepts To Motivate Learning and Economic Thinking," Working Papers in Economics 16/30, University of Canterbury, Department of Economics and Finance.
    2. Ross Kendall & Tim Ng, 2013. "The 2012 Policy Targets Agreement: an evolution in flexible inflation targeting in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 3-12, December.

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