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Pösö, M., Stracca, L. What is the Role of the Monetary Base in Monetary Policy Today?. Credit and Capital Markets – Kredit und Kapital, 37(2), 169-201. https://doi.org/10.3790/ccm.37.2.169
Pösö, Mika and Stracca, Livio "What is the Role of the Monetary Base in Monetary Policy Today?" Credit and Capital Markets – Kredit und Kapital 37.2, 2004, 169-201. https://doi.org/10.3790/ccm.37.2.169
Pösö, Mika/Stracca, Livio (2004): What is the Role of the Monetary Base in Monetary Policy Today?, in: Credit and Capital Markets – Kredit und Kapital, vol. 37, iss. 2, 169-201, [online] https://doi.org/10.3790/ccm.37.2.169
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What is the Role of the Monetary Base in Monetary Policy Today?

Pösö, Mika | Stracca, Livio

Credit and Capital Markets – Kredit und Kapital, Vol. 37 (2004), Iss. 2 : pp. 169–201

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Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.37.2.169
Language
Multiple languages
Pages
33

Author Details

Mika Poso, Frankfurt/M.

Livio Stracca, Frankfurt/M.

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Abstract

What is the Role of the Monetary Base in Monetary Policy Today?

This paper provides a selective and up-to-date review of the literature on the possible roles of the monetary base in monetary policy. The paper emphasises that, while the monetary base lies at the core of central banking and is the ultimate instrument allowing central banks to exert influence over interest rates and ultimately over macroeconomic conditions, it has seldom played a significant role in formulating and implementing monetary policy. In particular, the monetary base has very seldom been used as a sole operational target and the experience with the monetary base as an intermediate target is also rather limited. Today, for most central banks the monetary base appears to be at most an information variable. However, the debate over monetary policy when interest rates hit the zero bound and some recent theoretical advances have recently revived the academic and policy interest in the monetary base. (JEL E51, E52, E58)

Table of Contents

Section Title Page Action Price
Mika Poso/Livio Stracca: What is the Role of the Monetary Base\rin Monetary Policy Today? 169
I. Introduction 169
II. Some Recent Contributions to the Macroeconomic Role of the Monetary Base 172
1. Can the Monetary Base Enter Into the Aggregate Demand Curve? 173
a) As an Information Variable 173
b) As a Policy Instrument 175
2. Will the Monetary Base Disappear? Will it Matter for the Implementation of Monetary Policy? 178
III. The Experience with the Monetary Base as a Target or Indicator 180
1. The Monetary Base as an Intermediate Target 181
2. The Monetary Base as Operating Target: Controllability Problems 185
3. The Monetary Base as an Information Variable 189
4. Some Selected Policy Experiences 191
IV. Conclusions 196
References 197
Summary: What is the Role of the Monetary Base in Monetary Policy Today? 200
Zusammenfassung: Welche Rolle spielt die monetäre Basis in der Geldpolitik von heute? 200
Résumé: Quel est aujourd'hui le rôle de la base monétaire dans la politique monétaire? 200

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