The increasing importance of interest rates over monetary aggregates in monetary policy : a case study of the Reserve Bank of Australia and the Deutsche Bundesbank

Wittenberg, Renè. (1990). The increasing importance of interest rates over monetary aggregates in monetary policy : a case study of the Reserve Bank of Australia and the Deutsche Bundesbank Honours Thesis, School of Economics, University of Queensland.

       
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Author Wittenberg, Renè.
Thesis Title The increasing importance of interest rates over monetary aggregates in monetary policy : a case study of the Reserve Bank of Australia and the Deutsche Bundesbank
School, Centre or Institute School of Economics
Institution University of Queensland
Publication date 1990
Thesis type Honours Thesis
Total pages 115
Language eng
Subjects 14 Economics
Formatted abstract       The existence of a money supply that is endogenously determined ensures that the instrument of monetary policy is the interest rate.

      Both the German and the Australian economies were found to have institutional arrangements inherent in their financial systems that promote market-orientated policies which operate in a liberalised and unregulated environment and therefore ensure the endogeneity of the money stock.

      Financial innovation and deregulation measures have destabilised the demand for money relationship in Australia, and have lead to the abandonment of monetary targeting by the Reserve Bank. The process of monetary targeting has been replaced by a "check-list" approach and the Reserve Bank now operates monetary policy only via short-term interest rates.

      The Bundesbank has been able to continue monetary targeting because the money demand function has remained stable in Germany. However external and domestic disturbances have led to an increased use of interest rate policy by the Bundesbank, resulting in frequent misses of the monetary target.

 
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Created: Wed, 24 Nov 2010, 11:11:08 EST by Muhammad Noman Ali on behalf of The University of Queensland Library