Remarks on the measurement and the determinants of the money supply

Abstract

The renaissance of monetary policy after the second world war has naturally led to an increase of interest not only in the problems of measurement of the money stock and its changes through time, but also factors which determine the size and changes of the money stock at any time. The present work first briefly considers the statistical aspects of the determination of the money supply. The problem of the determinants of the money supply is then examined. The author argues that the actual size of the money stock depends not only on the behaviour of the banks but also non the behaviour of the decision making units in the real sector and, therefore, is an endogenously determined quantity within the framework of the total system. Hence, the actual stock and its changes cannot be controlled by the central bank.

JEL: E51, E52, E58