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July/August 2001, 
Vol. 83, No. 4
Posted 2001-07-01

Monetary Policy Analysis in Models Without Money

by Bennett T. McCallum

The article first specifies a small prototype model that reflects today’s standard monetary policy approach and asks whether its adoption implies that monetary policy has little or nothing to do with money. The answer is “no.” Next it argues that the prototype model excludes monetary aggregates only because of an assumption concerning the monetary transactions technology that seems unjustifiable in principle.