Monetary policy is not the force it was

This article in the Financial Times suggests that monetary policy does not have much to do with money. There is hard evidence that bank lending is quantitatively the most important channel through which monetary policy affects the economy, but this should not be reassuring it says. Mr Greenspan and his colleagues have a problem, their primary tool just does not look as powerful as it once was.

First published in the UK edition of the Financial Times, 6 August. The writer, Stephen Cecchetti, is

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