Controllability of various monetary aggregates /
By: Lamberte, Mario B.
Series: Vol. 11 No. 2 Second Sem 1984.Description: p.230-256.Subject(s): Central Banks | Monetary aggregates | Monetary policyOnline resources: Click here to access online In: Journal of Philippine DevelopmentSummary: This study attempts to determine the extent to which the various monetary aggregates can be controlled by the Cental Bank. The Central Bank of the Philippines currently uses monetary aggregates as intermediate targets of monetary policy. The success of this strategy defends on two conditions. One, the aggregates bear a close and predictable relationship to the ultimate target variable, say GNP, which policymakers seek to influence. In this case, the monetary aggregates can indicate what will happen to the ultimate target variable as a result of policy actions taken by the Central bank. The second condition is that the monetary authority can control movements of the aggregates by simply adjusting the instruments of monetary policy as it would be meaningless to target a variable over which Central Bank has no control. The monetary aggregates that satisfy both conditions can then serve as indicators of policy actions as well as movements of economic activityThis study attempts to determine the extent to which the various monetary aggregates can be controlled by the Cental Bank. The Central Bank of the Philippines currently uses monetary aggregates as intermediate targets of monetary policy. The success of this strategy defends on two conditions. One, the aggregates bear a close and predictable relationship to the ultimate target variable, say GNP, which policymakers seek to influence. In this case, the monetary aggregates can indicate what will happen to the ultimate target variable as a result of policy actions taken by the Central bank. The second condition is that the monetary authority can control movements of the aggregates by simply adjusting the instruments of monetary policy as it would be meaningless to target a variable over which Central Bank has no control. The monetary aggregates that satisfy both conditions can then serve as indicators of policy actions as well as movements of economic activity