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Causes, Costs and Benefits of Sound Money

  • Ansgar BelkeEmail author
  • Thorsten Polleit
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The Objective of Price Stability

In most countries, price stability has become the primary objective of monetary policy. In 2006, US Fed chairman Ben S. Bernanke said: “Price stability plays a dual role in modern central banking: It is both an end and a means of monetary policy.” (…) “Central bankers, economists, and other knowledgeable observers around the world agree that price stability both contributes importantly to the economy’s growth and employment prospects in the longer term and moderates the variability of output and employment in the short to medium term.”

Price stability is considered as a situation in which the economy’s price level does neither increase nor decrease over time; that said, price stability is a situation in which inflation (that is an ongoing increase in the economy’s price level) and deflation (that is a ongoing decline in the economy’s price level) are actually absent, or, to put it differently: price stability is a situation in which the purchasing power...

Keywords

Interest Rate Monetary Policy Asset Price Price Level Money Supply 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Authors and Affiliations

  1. 1.Chair for MacroeconomicsUniversity Duisburg-Essen Faculty of Economics and Business Administration45117 EssenGermany
  2. 2.Frankfurt School of Finance & Management60314 Frankfurt am MainGermany

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