Implicitly, most central banks now reject the propositions of monetarism, argues Robert L. Hetzel in the latest issue of Economic Quarterly. They do not characterize themselves as creators of money, but instead emphasize their role in influencing financial intermediation. They do not discuss monetary policy in terms of a rule, but instead use the language of discretion. They refer to the low level of interest rates to characterize monetary policy as stimulative despite low rates of growth of money and nominal gross domestic product. Hetzel explores the question of whether monetarist ideas retain relevance for central banks.
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