Assessing the origins and legacy of monetary aggregates

Paweł Kowalewski
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Paweł Kowalewski: Narodowy Bank Polski, Market Operations Department

Bank i Kredyt, 2025, vol. 56, issue 4, 381-412

Abstract: Monetary aggregates were an extremely popular strategy pursued by the majority of central banks between the turn of 1970s and 1980s. The gathering pace of deregulation in the international financial markets in the 1980s started, however, to affect demand for money and subsequently it made almost impossible for the majority of central banks to rely on this particular strategy any longer. Still, there was one central bank which, with the help of its pragmatism and a rather versatile approach towards monetary aggregates, managed to prove that these aggregates were useful in preserving the monetary equilibrium. December 2024 marks the 50th anniversary of the German DBB (Deutsche Bundesbank) decision to stick to this monetary tool. This anniversary poses a good opportunity to present their origins as well as their legacy. This assessment will be done with a historical and theoretical presentation along with a detailed description of the DBB’s case.

Keywords: monetary policy history; inflation; monetary aggregates; quantity theory of money; DBB (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 N12 N14 (search for similar items in EconPapers)
Date: 2025
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