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The price level and monetary policy

Author

Listed:
  • Charles P. Kindleberger

    (Lexington, Mass. (USA))

Abstract

Most central banks are required to or choose to stabilize a price index, largely by manipulating short term interest rates. A serious problem is which index to choose among the national income deflator, wholesale prices, the cost of living, with or eliminating highly volatile commodities such as food and energy, to produce a core index, plus others such as housing, including or without imputed rent of owner-occupied houses, or assets, whether equities or houses. No obvious and widely agreed index exists. Even if there were a clear choice, there remains a question whether a central bank should carefully consider action in order to achieve other goals: full employment, adjustment of the balance of payments, of the exchange rate, prevention of bubbles in asset prices, or recovery from financial crises. If so, the question of central bank weapons remains: monetary expansion or contraction, credit controls, for overall or for particular purposes, and moral suasion.

Suggested Citation

  • Charles P. Kindleberger, 2002. "The price level and monetary policy," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 55(220), pages 3-12.
  • Handle: RePEc:psl:bnlqrr:2002:11
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9901/9783
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    More about this item

    Keywords

    Cost of Living; Interest Rates; Interest; Monetary Policy; Monetary; Policy; Price Level; Prices;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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