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The Role of the Monetary Base in Australia

Author

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  • Douglas D. Purvis

    (Queen's University, Canada. This paper was initially prepared while I was a Visiting Research Economist at the Reserve Bank of Australia. I would like to thank: M. Bush, P. Mair and P. Norman for many valuable and informative discussions about the Australian banking system; also R. Officer and an anonymous referee of this journal for their helpful comments on an earlier version of this paper. Any opinions expressed and errors that remain are my own; in particular, the views in this paper should not be taken as representative of the Reserve Bank of Australia, or any of its officers.)

Abstract

While the monetary base might be a useful concept for analyzing variation in the money supply, it is a misleading indicator of the central bank's monetary policy. Three intervening institutional considerations are: (1) regulation of interest rates and the central bank's trading in LGS assets with the banks; (2) Government banking with the central bank; and (3) the role of Australian savings banks. Institutional change would increase the authorities' control over the money supply.

Suggested Citation

  • Douglas D. Purvis, 1976. "The Role of the Monetary Base in Australia," Australian Journal of Management, Australian School of Business, vol. 1(1), pages 73-83, April.
    • Handle: RePEc:sae:ausman:v:1:y:1976:i:1:p:73-83
    DOI: 10.1177/031289627600100104
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