Does the stock of money have any causal significance?
Recent developments in macroeconomics, and economic policy in general, have produced a "new consensus" economy-wide model, in which the stock of money doesnot play any causal role. The stock of money operates a mere residual in the economic process. The absence of the stock of money in many current debates over monetary policy has prompted the statement by the Governor of the Bank of England (during his time as the Deputy Governor) that it is ironic that as central banks became more and more concerned with price stability, less and less attention is paid to money. Indeed, the decline of interest in money appeared to have coincided with low inflation in a significant number of countries. This has prompted a number of contributions that, wittingly or perhaps unwittingly, have attempted to "reinstate" a more substantial role for money in this "new" macroeconomics. In this paper we wish to argue that these attempts to "reinstate" money in current macroeconomic thinking entails two important problems.The first is that they contradict an important theoretical property of the new "consensus" macroeconomic model, namely that of dichotomy between the monetary and the real sector. The second is that some of these attempts either fail in terms of their objective, or merely reintroduce the problem rather than solving it. We conclude that if money is to be given a causal role in the "new" consensus model, then a great deal of more substantial research would be necessary.
Volume (Year): 56 (2003)
Issue (Month): 225 ()
|Contact details of provider:|| Web page: http://www.economiacivile.it|
|Order Information:||Web: http://www.economiacivile.it|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Clarida, R. & Gali, J. & Gertler, M., 1999.
"The Science of Monetary Policy: A New Keynesian Perspective,"
99-13, C.V. Starr Center for Applied Economics, New York University.
- Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
- Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
- Richard Clarida & Jordi Gali & Mark Gertler, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," NBER Working Papers 7147, National Bureau of Economic Research, Inc.
- Richard Clarida & Jordi Galí & Mark Gertler, 1997. "The science of monetary policy: A new Keynesian perspective," Economics Working Papers 356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Heinz-Peter Spahn, 2001.
"On the theory of interest rate policy,"
BNL Quarterly Review,
Banca Nazionale del Lavoro, vol. 54(219), pages 355-380.
- Bennett T. McCallum, 2001.
"Monetary Policy Analysis in Models Without Money,"
NBER Working Papers
8174, National Bureau of Economic Research, Inc.
- Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996.
"The Financial Accelerator and the Flight to Quality,"
The Review of Economics and Statistics,
MIT Press, vol. 78(1), pages 1-15, February.
- Simon Gilchrist & Ben S. Bernanke & Mark Gertler, 1994. "The financial accelerator and the flight to quality," Finance and Economics Discussion Series 94-18, Board of Governors of the Federal Reserve System (U.S.).
- Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1994. "The Financial Accelerator and the Flight to Quality," Working Papers 94-24, C.V. Starr Center for Applied Economics, New York University.
- Ben Bernanke & Mark Gertler & Simon Gilchrist, 1994. "The Financial Accelerator and the Flight to Quality," NBER Working Papers 4789, National Bureau of Economic Research, Inc.
- Philip Arestis & Malcolm Sawyer, 2006.
"The nature and role of monetary policy when money is endogenous,"
Cambridge Journal of Economics,
Oxford University Press, vol. 30(6), pages 847-860, November.
- Philip Arestis & Malcolm Sawyer, 2003. "The Nature and Role of Monetary Policy When Money Is Endogenous," Economics Working Paper Archive wp_374, Levy Economics Institute.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Ben S. Bernanke & Mark Gertler, 1999.
"Monetary policy and asset price volatility,"
Proceedings - Economic Policy Symposium - Jackson Hole,
Federal Reserve Bank of Kansas City, pages 77-128.
- David Romer, 2000.
"Keynesian Macroeconomics without the LM Curve,"
NBER Working Papers
7461, National Bureau of Economic Research, Inc.
- Laidler, David, 1999. "The Quantity of Money and Monetary Policy," Staff Working Papers 99-5, Bank of Canada.
- Ben S. Bernanke & Mark Gertler & Mark Watson, 1997.
"Systematic Monetary Policy and the Effects of Oil Price Shocks,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
- Bernanke, Ben S. & Gertler, Mark & Waston, Mark, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Working Papers 97-25, C.V. Starr Center for Applied Economics, New York University.
- Philip Arestis & Malcolm Sawyer, 2002.
"Can Monetary Policy Affect The Real Economy?,"
Economics Working Paper Archive
wp_355, Levy Economics Institute.
- Laurence H. Meyer, 2001. "Does money matter?," Review, Federal Reserve Bank of St. Louis, issue May, pages 1-16.
- Cottrell, Allin, 1994. "Post-Keynesian Monetary Economics," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 587-605, December.
- Arestis, Philip & Howells, Peter, 1996. "Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'," Cambridge Journal of Economics, Oxford University Press, vol. 20(5), pages 539-51, September.
- Philip Arestis & Malcolm Sawyer, 2002. "The Bank of England Macroeconomic Model: Its Nature and Implications," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(4), pages 529-545, July.
- Scott Hendry, 1995. "Long-Run Demand for M1," Macroeconomics 9511001, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:psl:bnlqrr:2003:22. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlo D'Ippoliti)
If references are entirely missing, you can add them using this form.