Taking Monetary Aggregates Seriously
In response to the recent financial crisis, central banks around the world, including the Bank of Canada, have provided markets with extraordinary levels of liquidity. As the economic recovery takes hold, the question arises of what the increased liquidity, through higher money growth, portends for the near future. The supply of and demand for money carries information on the outlook for inflation and economic growth. Current evidence suggests a rebound in economic growth and inflationary pressure unless the Bank begins to rein in money growth. The Bank of Canada should provide some guidance on its thinking on the behaviour of monetary and credit aggregates and what it entails for inflation and economic growth.
|Date of creation:||Mar 2010|
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|Publication status:||Published on the C.D. Howe Institute website, March 2010|
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- Jeffrey A. Frankel, 2006.
"The Effect of Monetary Policy on Real Commodity Prices,"
NBER Working Papers
12713, National Bureau of Economic Research, Inc.
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