In the canonical monetary policy model, money is endogenous to the optimal path for interest rates and output. But when liquidity provision by banks dominates the demand for transactions money from the real economy, money is likely to contain information for future output and inflation because...

In the canonical monetary policy model, money is endogenous to the optimal path for interest rates and output. But when liquidity provision by banks dominates the demand for transactions money from the real economy, money is likely to contain information for future output and inflation because...

Henry Thornton's Paper Credit of Great Britain (1802) established once and for all the notion that central banks have the prime responsibility for controlling the money stock and the price level. This theme and the analytical framework underlying it reappeared in the famous Bullion Report...