Tài liệu Money and Interest Rates docx

Federal Reserve Bank of Minneapolis Quarterly Review

Fall 2001, Vol. 25, No. 4, pp. 2–13

Money and Interest Rates

Cyril Monnet Warren E. Weber

Economist Senior Research Officer

Directorate General Research Research Department

European Central Bank Federal Reserve Bank of Minneapolis

Abstract

This study describes and reconciles two common, seemingly contradictory

views about a key monetary policy relationship: that between money and

interest rates. Data since 1960 for about 40 countries support the Fisher

equation view, that these variables are positively related. But studies taking

expectations into account support the liquidity effect view, that they are

negatively related. A simple model incorporates both views and demonstrates

that which view applies at any time depends on when the change in money

occurs and how long the public expects it to last. A surprise money change that

is not expected to change future money growth moves interest rates in the

opposite direction; one that is expected to change future money growth moves

interest rates in the same direction. The study also demonstrates that stating

monetary policy as a rule for interest rates rather than money does not change

the relationship between these variables.

The views expressed herein are those of the authors and not necessarily those of the Federal

Reserve Bank of Minneapolis or the Federal Reserve System.