In a world of endogenous money, the central bank's role in monetary policy is reduced to the setting of a very short-term official rate of interest, which indicates the price at which it will make liquidity available to the banking system. However, it is changes in market rates that affect...

The Bank of England's report on its approach to macroeconomic modeling reveals the underlying structure of their macroeconomic model used for policy purposes. A simplified representation of the Bank of England model is presented, which is less disaggregated than the original model and focuses on...

Practical monetary policy concerns and recent theoretical developments have revived interest in the concept of a "natural" equilibrium real interest rate. The natural real interest rate is potentially an important concept for monetary policy makers and some researchers have suggested that the...