The monetary base typically is defined as a measure of the money-supply "impulse" originating from the stock of high-powered, central-bank money. In addition to nonbanks' demand for hand-to-hand currency, banks have demanded base money in the United States since 1913 to satisfy two needs. One is a reserve need, to fulfill a Federal Reserve regulatory requirement. The other is an operational nee...

Many explanations of the stylized facts concerning real exchange rate movements focus on monetary shocks, but it is often found empirically that monetary shocks are unimportant. I provide evidence that is contrary to this empirical finding. Using over 100 years of data, I estimate the contribution of various shocks to explaining variation in the real pound-dollar exchange rate. Monetary shocks ...

This paper contributes to the analysis of the money supply process in Germany during the period of monetary targeting by the Bundesbank from 1975-1998. While the standard money multiplier approach assumes that the money stock is determined by the money multiplier and the monetary base it is argued here that both the money stock and the monetary base are determined endogenously by the optimizing...

FREQUENTLY CITED THEORETICAL framework for the conduct of monetary policy consists of a policy instrument, an intermediate policy target and a long-run policy objective. The policy instrument is a lever which the central bank can manipulate to achieve its intermediate target. Possible choices for the policy instrument include the quantity of bank reserves, the monetary base (hank reserves plus ...

For many years, the yin and yang of the debate about the causes of the Great Depression were The Monetary History of the United States, 1867-1960 by Milton Friedman and Anna Schwartz (1963), and Peter Temin’s 1976 book, Did Monetary Forces Cause the Great Depression? As all monetary economists know, in their book Friedman and Schwartz made the Depression a central case study in support of their...

This paper presents a number of responses to Gordon de Brouwer’s criticisms of my paper on monetary policy in Indonesia. Among other things, it argues that de Brouwer has failed to disentangle the impact of two exogenous disturbances on prices—and relative prices—during the crisis and post-crisis period. These disturbances were capital flight, which resulted in real depreciation of the rupiah, ...

The objective of this paper is to consider methodology for modelling time series data of monetary aggregates such as monetary base and broad money. A brief review is made with regard to the likelihood-based cointegration analysis of I(2) (integrated of order 2) data and I(2)-to-I(1) transformations. The paper then investigates procedures for econometric modelling of monetary aggregates, which a...