TY  - JOUR
AU  - Woodford,Michael
TI  - How Important is Money in the Conduct of Monetary Policy?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13325
PY  - 2007
Y2  - August 2007
UR  - http://www.nber.org/papers/w13325
L1  - http://www.nber.org/papers/w13325.pdf
N1  - Author contact info:
Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
AB  - 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.
ER  -