Some Alternative Monetary Facts

Peter Stella and Manmohan Singh

No 2021/006, IMF Working Papers from International Monetary Fund

Abstract: In this paper, we discuss the modern history of monetarism and its alternatives, as well as the changing empirical relationship of various measures of money and inflation. After demonstrating that previous naïve correlations between money and inflation as established in the 20th century literature have largely disappeared, we explain why this cannot be taken as support for an increased reliance on permanent monetary finance. Rather, we argue that rapid technological innovation in payments systems—both public and private—including in global pledged collateral markets, portends a declining demand for central bank liabilities.

Keywords: money aggregates; monetary financing; central bank balance sheet; WP; bank reserves; interest rate; financial market; balance sheet expansion; money demand (search for similar items in EconPapers)
Pages: 39
Date: 2021-01-08
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac, nep-mon and nep-pay
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