Weighted Dutch and German Monetary Aggregates: How Do They Perform as Monetary Indicators for The Netherlands

Abstract

In the 1970s, the heyday of monetarism, ‘money matters’ gradually became incorporated into mainstream macroeconomics. It was generally recognised that shocks to the money supply formed an important source of business-cycle fluctuations, and that excessive money growth caused inflation in the intermediate run. As a consequence, many central banks switched to a policy of targeting growth rates of monetary aggregates to control inflation. Prime examples are the USA, Switzerland and Germany. Over the years since then, however, most central banks in the industrialised world have again abandoned monetary targeting, although inflation control – or even price stability – remains their dominant policy objective.

Comments by Coen Oort and Martin Fase on an earlier version of this chapter are gratefully acknowledged. Any remaining errors are, of course, our own.