The Conduct of Monetary Policy

摘要: Nowadays the Central Bank of a country is monopoly supplier legal tender currency. The commercial banks are committed to making their deposits convertible at par into such So need keep reserves in form currency and Bank. primarily conducts its policy by buying selling financial securities, e.g. Treasury bills or foreign exchange, exchange for own liabilities, i.e. open market operations. Academic economists generally regard operations as adjusting quantitative volume banks' reserve base, hence money stock, with rates (prices) markets simultaneously determined interplay demand supply. practitioners, almost always, view themselves unable deny base that banking system requires, see setting level interest rates, which requirements met, quantity then portfolio preferences private sector non-banks. This difference perceptions discussed again Section III. Whether monetary Banks should be viewed terms quantity, rate, actions, (though, course, one dual other), these had allowed inflation, inflationary expectations, become entrenched end I970s. A selection representative statistics number leading industrialised countries given Table i below. table indicates common pattern, among countries, interaction between inflation growth output. first period, I969-78, marked high negative real slightly above average growth; second I979-82, very nominal, real, (but falling) low output growth. final i983-7, much lower but still recovery growth, some cases rates. In contrast, relationship chosen key aggregate nominal incomes appears weaker; also Clinton Chouraqui (I987), especially p. 7. measured of' real' after adjustment prospective future during