Alternative Operating Procedures for Monetary Policy - A New Look at the Money Supply Process
This paper develops a new framework for the process of money supply. In contrast to models like McCallum (1989) based on the money multiplier analysis or the credit market models of Brunner and Meltzer (1966, 1973) our model explicitly illustrates the interaction of non-banks, banks and the central bank on the two relevant markets: the market for central bank money and the market for bank credit (which is identical to the macroeconomic 'money market'). Special emphasis is placed on the role of the central bank and its alternative control procedures for the supply of base money: targeting the central bank rate or the quantity of high-powered money. It is shown that within the concept of monetary targeting the choice of the optimal control procedure critically depends on the relative strength of different shocks: if disturbances on the credit market dominate, monetary base targeting is to be preferred; conversely, if money multiplier shocks dominate, interest rate targeting should be favoured.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Oct 1995|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1257. 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: ()The email address of this maintainer does not seem to be valid anymore. Please ask to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.