How important is money in the conduct of monetary policy?
By: Michael Woodford.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13325.; Working paper series (National Bureau of Economic Research) -- working paper no. 13325.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 51
Subjects: Monetary policy -- Mathematical models
Description: I consider some of the leading arguments for assigning an important role to tracking the growth of monetary aggregates when making decisions about monetary policy. First, I consider whether ignoring money means returning to the conceptual framework that allowed the high inflation of the 1970s. Second, I consider whether models of inflation determination with no role for money are incomplete, or inconsistent with elementary economic principles. Third, I consider the implications for monetary policy strategy of the empirical evidence for a long-run relationship between money growth and inflation. And fourth, I consider reasons why a monetary policy strategy based solely on short-run inflation forecasts derived from a Phillips curve may not be a reliable way of controlling inflation. I argue that none of these considerations provides a compelling reason to assign a prominent role to monetary aggregates in the conduct of monetary policy.
Notes: "August 2007."

Includes bibliographical references (p. 45-51).

Also available in PDF from the NBER World Wide Web site (www.nber.org).