Lifting the cloud of confusion over monetary policy

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Coombes, Trevor and Reimers, David (2009) Lifting the cloud of confusion over monetary policy. Economic Papers, 28 (2). pp. 130-138. ISSN 0812-0439


There is no doubt that the Reserve Bank of Australia (RBA) controls base money, but this paper shows that the RBA does not, and has no need to, target base money in order to re-set the cash rate. The money supply in Australia, including base money, is endogenous. Conceiving base money as an instrument of policy confuses normal smoothing operations with a change in stance.

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Item type Article
DOI 10.1111/j.1759-3441.2009.00016.x
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Subjects Historical > Faculty/School/Research Centre/Department > School of Economics and Finance
Historical > FOR Classification > 1402 Applied Economics
Historical > SEO Classification > 9101 Macroeconomics
Keywords ResPubID17365. endogenous base money, cash rate determination, smoothing, monetary policy, economic trends, economic forecasting, Reserve Bank, RBA, Australia, Australian
Citations in Scopus 0 - View on Scopus
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