英语论文网

raditional territorial currency. The goal of monetary policy, to repeat, is to keep aggregate spending generally in line with production capacity. Since the level of expenditures (nominal demand) cannot be controlled directly, the trick is to find some way to accomplish the same objective indirectly. Central banks seek to do this by managing the overall stock of money in circulation.
A major problem, of course, is the fact that not all of the money stock can be controlled directly. Monetary aggregates can be calculated in a number of ways, from the core measure M0, comprising notes and coins in circulation ("central-bank currency"), to M1, which adds conventional checking accounts (demand deposits), to even broader measures including other "reservable" deposits (M2) and progressively less liquid classes of financial claims (M3, M4). Only notes and coins come straight from state authorities. This aggregate, however, is far too narrow a measure for the purposes of monetary policy and in any event is greatly overshadowed by the mass of deposits in most economies. Yet deposits -- otherwise known as bank money -- are created not by the central bank but by commercial banks, based on the availability of reserves. The challenge for central banks, therefore, is to develop instruments that can effectively guide the process of deposit creation.
Typically, these instruments aim to exercise influence over bank reserves, on the assumption that such influence in turn will condition the public's overall access to credit. The most popular tools of monetary policy are open-market operations, which control the total quantity of reserves, and discount-rate policy, which controls the price at which reserves are traded among banks or between banks and the central bank. Open-market operations involve purchases and sales of widely traded financial claims, usually government securities, by the central bank with the market in general. Discount-rate policy involves the interest charged by the central bank for providing reserves directly to the banking system, either through lending at a "discount window" or through rediscounting or purchasing assets held by banks.
In fact, therefore, the series of links in monetary policy - what economists call the transmission mechanism of monetary policy -- is fairly lengthy, running from (1) open-market operations and the discount rate to (2) bank reserves to (3) deposit creation to (4) aggregate expenditures. Two key implications follow. First, since none of the links in the transmission mechanism is purely mechanical, there is ample room for slippage between central-bank decisions and the actual behavior of spending. Monetary policy is hardly a matter of merely turning a tap on or off. And second, since none of the links can be by-passed, there is ample room for long lags as well in the ultimate impact of central-bank decisions. As a vehicle for the implementation of public priorities, monetary policy is hardly swift either.
Still, so long as the state's own currency is the only money available, the central bank has adequate reason to believe that its decisions can be broadly effective in steering macroeconomic performance. Control of the monetary aggregates may be neither precise nor immediate. But in the absence of any attractive substitutes for the national currency, nominal demand has little option but to adjust, more or less in proportion, to variations of availa