Financial Theory and Central Bank Policies

Marvin Goodfriend

Chapter 5 in Monetary Theory and Monetary Policy, 1993, pp 100-118 from Palgrave Macmillan

Abstract: Abstract Central banking lies at the heart of macroeconomic policy analysis. The management of high-powered money by central banks dominates the stochastic behaviour of the price level, inflation and nominal interest rates. Moreover, monetary policy is the primary means by which governments attempt to stabilise employment and output fluctuations. But a central bank is more than the national monetary authority. It is also the custodian of the national banking system. In this latter capacity central banks behave as financial intermediaries, providing emergency credit assistance to individual institutions. They also stand ready to provide last-resort lending in the event of system-wide financial crises. Even routine nominal interest rate smoothing by central banks is pursued in large part because of the belief that it stabilises financial markets.

Keywords: Interest Rate; Monetary Policy; Federal Reserve; Real Interest Rate; Nominal Interest Rate (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-23096-9_8

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349230969

DOI: 10.1007/978-1-349-23096-9_8

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().