Uncertainty and the financial process and its consequences for the power of the central bank

Authors

  • J.C.R. DOW

DOI:

https://doi.org/10.13133/2037-3643/10834

Keywords:

Central banks, monetary policy, exchange rates, interest rates, money supply

Abstract

Most monetary theorists claim that the money supply determines the price level and that the authorities set interest rates to influence investment and consumption. The author asks how central banks, relatively small financial institutions, can affect the real world. In analysis, the article deals with determination of exchange rates, interest rates and the money supply. The author concludes that central banks have influence, within a limited range, only because of uncertainty. Because of uncertainty, the links between financial and real assets are weak in the short- to medium-term allowing some influence to be wielded by a central authority.

 

JEL: E52, E58

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Published

2013-10-17

How to Cite

DOW, J. (2013). Uncertainty and the financial process and its consequences for the power of the central bank. PSL Quarterly Review, 41(166). https://doi.org/10.13133/2037-3643/10834

Issue

Vol. 41 No. 166 (1988)

Section

Editorial

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