Monetary Policy Uncovered: Theory and Practice

Giuseppe Fontana and Alfonso Palacio-Vera

International Review of Applied Economics, 2004, vol. 18, issue 1, 1-19

Abstract: This paper discusses the current 'new consensus' view on monetary policy and the theoretical framework on which that practical view relies, namely, the 'targets-and-instrument approach'. We argue that in the modern world of financial innovation and liability management central banks cannot choose between an interest rate-targeting policy and a money-targeting policy. A money-targeting regime is not desirable, if not unfeasible. In addition, in the context of Poole's approach to the 'instrument' problem, the implementation of a money-targeting regime would raise the expected value of the loss function of the central bank and would thus shift the balance in favour of an interest-rate targeting regime.

Keywords: Monetary policy; Poole's approach; Post Keynesian economics; endogenous money (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/0269217032000148627 (text/html)
Access to full text is restricted to subscribers.

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:taf:irapec:v:18:y:2004:i:1:p:1-19

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIRA20

DOI: 10.1080/0269217032000148627

Access Statistics for this article

International Review of Applied Economics is currently edited by Professor Malcolm Sawyer

More articles in International Review of Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().