Central bank behaviour and the stability of macroeconomic equilibrium: a critical examination of the 'New Consensus'

Mark Setterfield

Chapter 3 in The New Monetary Policy, 2005 from Edward Elgar Publishing

Abstract: Beginning with an assessment of new thinking in macroeconomics and monetary theory, this book suggests that many countries have adopted the New Consensus Monetary Policy since the early 1990s in an attempt to reduce inflation to low levels. It goes on to illustrate that the explicit control of the money supply, which was fashionable in the 1970s and 1980s in the UK, US, Europe and elsewhere, was abandoned in favour of monetary rules that focus on interest rate manipulation by the central bank. The objective of these rules is to achieve specific, or a range of, inflation targets.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2005
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