The European Central Bank has assigned a special role to money in its two pillar strategy and has received much … criticism for this decision. The case against including money in the central bank's interest rate rule is based on a standard … decades. In this paper, we develop a justification for including money in the interest rate rule by allowing for imperfect …

modified to account for observed money growth and inflation trends, and that monetary trends may serve as a useful cross … persistent errors in monetary policy and sustained trends in money growth and inflation. If interest rate prescriptions derived … from Keynesian-style models are augmented with a cross-check against money-based estimates of trend inflation, inflation …

The European Central Bank has assigned a special role to money in its two pillar strategy and has received much … criticism for this decision. In this paper, we explore possible justifications. The case against including money in the central … contributions to research on monetary policy in the last two decades. Of course, if one allows for a direct effect of money on …

criticized for failing to explain common trends in money growth and inflation, and that therefore money should be used as a cross …

justified empirically. Both the relation between money and inflation, and between money and aggregate demand, are considered … by money growth. This relationship arises from a conventional aggregate-demand channel; an emphasis on the link between … monetary aggregates and inflation in no way requires a direct channel connecting money and inflation. The relevance of money …

IS-LM framework tends to understate the value of money as an indicator for monetary policy. …

driven by the crisis. Our general point is that money matters in financial markets. Different financial assets have different …

asset (money). We show that, even in the absence of asymmetric information or an agency problem, the private provision of … this. This distortion is present even if we introduce lending and government money. To eliminate the inefficiency the …

purchase different sizes of transactions. This can explain the demand for money itself, the precautionary demand for money, and …

amount of assets. The implication is that, instead of studying money demand using time series and looking at historical … can use this methodology to estimate the interest elasticity of money demand at interest rates close to zero. We find that …: (a) the elasticity of money demand is very small when the interest rate is small; (b) the probability that a household …