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Taking Monetary Aggregates Seriously

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  • Pierre Siklos

    (Wilfrid Laurier University)

Abstract

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.

Suggested Citation

  • Pierre Siklos, 2010. "Taking Monetary Aggregates Seriously," e-briefs 94, C.D. Howe Institute.
    • Handle: RePEc:cdh:ebrief:94
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    File URL: https://www.cdhowe.org/public-policy-research/taking-monetary-aggregates-seriously
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    References listed on IDEAS

    as
    1. Pierre L. Siklos, 2009. "As Good As It Gets? The International Dimension to Canada's Monetary Policy Strategy Choices," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 292, July.
    2. David Laidler & William B.P. Robson, 2004. "Two Percent Target: The Context, Theory, and Practice of Canadian Monetary Policy since 1991," C.D. Howe Institute Policy Studies, C.D. Howe Institute, number 20041, January.
    3. Claudio E. V. Borio & Philip Lowe, 2004. "Securing sustainable price stability: should credit come back from the wilderness?," BIS Working Papers 157, Bank for International Settlements.
    4. John B. Taylor, 2009. "The Need for a Clear and Credible Exit Strategy," Book Chapters, in: John D. Ciorciari & John Taylor (ed.), The Road Ahead for the Fed, chapter 6, Hoover Institution, Stanford University.
    5. Burdekin, Richard C.K. & Siklos, Pierre L., 2008. "What has driven Chinese monetary policy since 1990? Investigating the People's bank's policy rule," Journal of International Money and Finance, Elsevier, vol. 27(5), pages 847-859, September.
    6. Jeffrey A. Frankel, 2008. "The Effect of Monetary Policy on Real Commodity Prices," NBER Chapters, in: Asset Prices and Monetary Policy, pages 291-333, National Bureau of Economic Research, Inc.
    7. Pierre L. Siklos & Andrew G. Barton, 2001. "Monetary aggregates as indicators of economic activity in Canada: empirical evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(1), pages 1-17, February.
    8. Donald L. Kohn, 2009. "Monetary Policy in the Financial Crisis," Book Chapters, in: John D. Ciorciari & John Taylor (ed.), The Road Ahead for the Fed, chapter 4, Hoover Institution, Stanford University.
    9. Scott Hendry & Charleen Adam, 2001. "The M1 Vector-Error-Correction Model: some Extensions and Applications," Money Affairs, CEMLA, vol. 0(2), pages 145-175, July-Dece.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Philippe Bergevin, 2010. "Addicted to Ratings: The Case for Reducing Governments’ Reliance on Credit Ratings," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 130, May.
    2. William B.P. Robson & Colin Busby, 2010. "Freeing up Food: The Ongoing Cost, and Potential Reform, of Supply Management," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 128, April.
    3. Lawrence L. Herman, 2010. "Trend Spotting: NAFTA Disputes After Fifteen Years," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 133, July.
    4. Benjamin Dachis & Robert Hebdon, 2010. "The Laws of Unintended Consequence: The Effect of Labour Legislation on Wages and Strikes," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 304, June.
    5. Steve Ambler, 2016. "Putting Money to Work: Monetary Policy in a Low Interest Rate Environment," e-briefs 249, C.D. Howe Institute.
    6. David Laidler, 2012. "Money Still Talks - Is Anyone Listening?," e-briefs 133, C.D. Howe Institute.
    7. John Richards, 2010. "Reducing Lone-Parent Poverty: A Canadian Success Story," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 305, June.
    8. Henning Bjornlund, 2010. "The Competition for Water: Striking a Balance among Social, Environmental, and Economic Needs," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 302, April.
    9. Robert Knox, 2010. "Who Can Work Where: Reducing Barriers to Labour Mobility in Canada," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 131, June.
    10. Martin Cave & Adrian Foster, 2010. "Solving Spectrum Gridlock: Reforms to Liberalize Radio Spectrum Management in Canada in the Face of Growing Scarcity," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 303, May.
    11. Jan Carr, 2010. "Power Sharing: Developing Inter-Provincial Electricity Trade," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 306, July.
    12. Noriega Antonio E. & Ramos Francia Manuel & Rodríguez-Pérez Cid Alonso, 2015. "Money Demand Estimations in Mexico and of its Stability 1986-2010, as well as Some Examples of its Uses," Working Papers 2015-13, Banco de México.
    13. Colin Busby & William B.P. Robson, 2010. "Target Practice Needed: Canada’s 2010 Fiscal Accountability Rankings," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 129, May.

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    More about this item

    Keywords

    Monetary Policy; Bank of Canada; monetary aggregates; money gap estimate; central bank policy;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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