Policy Consequences of Money Demand (In)Stability: National vs. European

  • Carlo Monticelli
Part of the Financial and Monetary Policy Studies book series (FMPS, volume 31)


This paper explores the implications of the (in)stability of national and area-wide money demand for the co-ordination of national monetary policies under an exchange rate agreement. If both national and area-wide money demands are stable and predictable, the symmetric and asymmetric schemes of monetary co-ordination are on an equal footing from the point of view of the stabilisation performance. If no money demand possesses the desirable properties, monetary targeting should be forsaken. If money demand in one country is significantly more stable than in the others and in the area as a whole, that country should be the anchor. If the area-wide money demand is the most stable, it is to the benefit of all countries to adopt the co-ordination scheme based on area-wide monetary control which, furthermore, automatically solves the issue of the symmetry of the system.


Exchange Rate Monetary Policy Real Exchange Rate Money Supply Money Demand 
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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Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • Carlo Monticelli
    • 1
  1. 1.Bank of ItalyItaly

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