Monetary Policy in Economies with Little or No Money

12 Pages Posted: 6 Jul 2004

See all articles by Bennett T. McCallum

Bennett T. McCallum

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

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Abstract

(1) Medium-of-exchange money will not entirely disappear in the foreseeable future. (2) In economies with no currency but settlement balances at the central bank, policy can be conducted much as at present by activist adjustment of overnight interest rates. (3) In economies without any money there can be no monetary policy. Liabilities of some official entity might serve as the medium of account, but there could be rivals. (4) A broad commodity-bundle monetary standard could be viable, even with a redemption medium, and there is scope for quantitative analysis of such systems. (5) The number of distinct national currencies may decline sharply.

Suggested Citation

McCallum, Bennett T., Monetary Policy in Economies with Little or No Money. Pacific Economic Review, Vol. 9, No. 2, pp. 81-92, June 2004, Available at SSRN: https://ssrn.com/abstract=551221

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