Interest Rates vs. Monetary Aggregates: A (Sort of) Brief History of the Monetary Policy Implementation Debate

As I mentioned in a previous post, I will be doing a series of posts on issues surrounding monetary policy implementation. I already broached the concept of monetary policy implementation vs. strategy, an understanding of which I think is critical for delving deeper into this topic, including what’s contained within this post.

Below, I summarize Bindseil’s account of the history of the debate surrounding the optimal approach to monetary policy implementation. Many of the people and ideas contained within will be familiar to those interested in this topic, but the historical arc along which they appear may be less widely known. Bindseil relies on an extensive set of primary and secondary sources. However, these views are not necessarily unique to Bindseil. I’d imagine Post-Keynesians would give similar accounts, and likely have. I’d also emphasize at the outset that this is a 4 page summary of ~34 pages of Bindseil’s work. Bindseil obviously provides much more argumentation, citation, and quotation than I do here. Moreover, this topic is returned to throughout his ~250 page book.