The Quantity of Money and Monetary Policy
The relationships among the quantity theory of money, monetarism and policy regimes based on money-growth and inflation targeting are briefly discussed as a prelude to an exposition of alternative views of money’s role in the transmission mechanism of monetary policy. The passive-money view treats the money supply as an endogenous variable that plays no role in that mechanism. In contrast the active-money view, while recognizing money’s endogeneity, nevertheless treats it as having causative significance for the behaviour of output and inflation. It is argued that the active view is more plausible, on both theoretical and empirical grounds. It is further suggested that, notwithstanding the effects of institutional change in the Canadian financial system on the stability of relationships involving the quantity of money, the active view implies the desirability of the Bank of Canada’s paying more systematic attention than it now does to the behaviour of monetary aggregates, particularly narrow ones, in the design and implementation of monetary policy.
|Date of creation:||1999|
|Date of revision:|
|Contact details of provider:|| Postal: 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada|
Phone: 613 782-8845
Fax: 613 782-8874
Web page: http://www.bank-banque-canada.ca/
References listed on IDEAS
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.:
- Söderlind, Paul & Vredin, Anders, 1995.
"Applied Cointegration Analysis in the Mirror of Macroeconomic Theory,"
CEPR Discussion Papers
1120, C.E.P.R. Discussion Papers.
- Soderlind, Paul & Vredin, Anders, 1996. "Applied Cointegration Analysis in the Mirror of Macroeconomic Theory," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(4), pages 363-81, July-Aug..
- Söderlind, Paul & Vredin, Anders, 1994. "Applied Cointegration Analysis in the Mirror of Macroeconomic Theory," SSE/EFI Working Paper Series in Economics and Finance 30, Stockholm School of Economics.
- Soderlind, P. & Vredin, A., 1994. "Applied Conintegration Analysis in the Mirror of Macroeconomic Theory," Papers 584, Stockholm - International Economic Studies.
- P.D. Jonson & E.R. Moses & C.R. Wymer, 1976. "A Minimal Model of the Australian Economy," RBA Research Discussion Papers rdp7601, Reserve Bank of Australia.
- Boyer, Russell S, 1978. "Optimal Foreign Exchange Market Intervention," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1045-55, December.
- St-Amant, P. & van Norden, S., 1997. "Measurement of the Output Gap: A Discussion of Recent Research at the Bank of Canada," Technical Reports 79, Bank of Canada.
- Fung, Ben Siu-cheong & Kasumovich, Marcel, 1998.
"Monetary shocks in the G-6 countries: Is there a puzzle?,"
Journal of Monetary Economics,
Elsevier, vol. 42(3), pages 575-592, October.
- Ben S.C. Fung & Marcel Kasumovich, 1997. "Monetary Shocks in the G-6 Countries: Is There a Puzzle?," Staff Working Papers 97-7, Bank of Canada.
- S. Hendry & G-J. Zhang, 1999.
"Liquidity Effects and Market Frictions,"
DNB Staff Reports (discontinued)
29, Netherlands Central Bank.
- Coletti, D. & Hunt, B. & Rose, D. & Tetlow, R., 1996. "The Bank of Canada's New Quarterly Projection Model. Part 3 , the Dynamic Model : QPM," Technical Reports 75, Bank of Canada.
- David E. Laidler, 1988.
"Taking Money Seriously,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 21(4), pages 687-713, November.
- Joseph Atta-Mensah, 1996. "The Empirical Performance of Alternative Monetary and Liquidity Aggregates," Macroeconomics 9601001, EconWPA.
- Charles Freedman, 1981. "Monetary Aggregates as Targets: Some Theoretical Aspects," NBER Working Papers 0775, National Bureau of Economic Research, Inc.
- Scott Hendry, 1995. "Long-Run Demand for M1," Macroeconomics 9511001, EconWPA.
- Davidson, James & Ireland, Jonathan, 1990.
"Buffer stocks, credit, and aggregation effects in the demand for broad money: Theory and an application to the U.K. personal sector,"
Journal of Policy Modeling,
Elsevier, vol. 12(2), pages 349-376.
- James Davidson & Jonathan Ireland, 1990. "Buffer stocks, credit, and aggregation effects in the demand for broad money: theory and an application to the U.K. personal sector," Proceedings, Federal Reserve Bank of Cleveland, pages 349-385.
- Gravelle, Toni, 1996.
"What Is Old Is New Again,"
The Manchester School of Economic & Social Studies,
University of Manchester, vol. 64(4), pages 388-404, December.
- Arturo Estrella & Frederic S. Mishkin, 1996.
"Is There a Role for Monetary Aggregates in the Conduct of Monetary Policy?,"
NBER Working Papers
5845, National Bureau of Economic Research, Inc.
- Estrella, Arturo & Mishkin, Frederic S., 1997. "Is there a role for monetary aggregates in the conduct of monetary policy?," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 279-304, October.
- Engert, Walter & Selody, Jack, 1998. "Uncertainty and Multiple Paradigms of the Transmission Mechanism," Staff Working Papers 98-7, Bank of Canada.
- Lyle E. Gramley & Samuel B. Chase, 1965. "Time deposits in monetary analysis," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Oct, pages 1380-1406.
- Jack Carr & Michael R. Darby, 1977.
"The Role of Money Supply Shocks in the Short-Run Demand for Money,"
UCLA Economics Working Papers
098, UCLA Department of Economics.
- Carr, Jack & Darby, Michael R., 1981. "The role of money supply shocks in the short-run demand for money," Journal of Monetary Economics, Elsevier, vol. 8(2), pages 183-199.
- Jack Carr & Michael R. Darby, 1980. "The Role of Money Supply Shocks in the Short-Run Demand for Money," NBER Working Papers 0524, National Bureau of Economic Research, Inc.
- Hahn, F H, 1971. "Professor Friedman's Views on Money," Economica, London School of Economics and Political Science, vol. 38(149), pages 61-80, February.
- Lane, Timothy D, 1990. "Costly Portfolio Adjustment and the Short-run Demand for Money," Economic Inquiry, Western Economic Association International, vol. 28(3), pages 466-87, July.
- Duguay, Pierre & Longworth, David, 1998. "Macroeconomic models and policy making at the bank of canada," Economic Modelling, Elsevier, vol. 15(3), pages 357-375, July.
When requesting a correction, please mention this item's handle: RePEc:bca:bocawp:99-5. 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: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.