TY  - JOUR
AU  - Estrella,Arturo
AU  - Mishkin,Frederic S.
TI  - Is There a Role for Monetary Aggregates in the Conduct of Monetary Policy?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5845
PY  - 1996
Y2  - November 1996
UR  - http://www.nber.org/papers/w5845
L1  - http://www.nber.org/papers/w5845.pdf
N1  - Author contact info:
Arturo Estrella
Department of Economics
Rensselaer Polytechnic Institute
Troy, NY  12180
Tel: 518-276-2049
E-Mail: estrea@rpi.edu

Frederic S. Mishkin
Columbia University
Graduate School of Business
Uris Hall 817
3022 Broadway
New York, NY 10027
Tel: 212-854-3488
Fax: 212/662-8474
E-Mail: fsm3@columbia.edu
AB  - We examine the potential policy role of monetary aggregates by attempting to use them as effectively as possible in the analysis of empirical relationships.  We consider three possible roles: as information variables, as indicators of policy actions and as instruments in a policy rule.  These require successively stronger and more stable relationships between the aggregates and the final policy targets.  Our results show that in the United States since 1979, the monetary aggregates fall considerably short of those requirements, and results with German M3 are hardly more favorable.  We also investigate whether empirical relationships are not reflective of causal relationships because of the use of these variables in counter cyclical policy.  The results are reasonably consistent with that notion in the case of interest rates, but not in the case of the aggregates.
ER  -