Wyplosz, Charles2017-08-282017-08-282009https://hdl.handle.net/10986/28003This paper offers a personal review of the current state of knowledge on monetary policy. In a nutshell, what Friedman knew-have survived, but that modern monetary policy departs in some important ways from older principles? The older wisdom that monetary policy determines inflation in the long run but can have systematic shorter run effects has survived a major challenge. Most of the new ideas stem from the recognition of the crucial role of expectations. In today's world, this observation lies behind the spectacular trend toward ever greater central bank transparency. Then it is more than likely that ideas will change in the wake of the global financial crisis. Early debates challenge the old wisdom that central banks ought to be mainly concerned with price stability. In particular, financial stability has always been part of a central bank's mission, but it has occupied limited space in theoretical and empirical studies.en-USCC BY 3.0 IGOACCOUNTABILITYASSET PRICEASSET PRICESASSETSASYMMETRIC INFORMATIONAUTONOMYBAILOUTBAILOUTSBANK BAILOUTSBANK BALANCE SHEETSBANK CREDITBANK OF JAPANBANK OPERATIONSBANK POLICYBANK SECRECYBANKING SYSTEMBANKING SYSTEMSBORROWERBUDGET CONSTRAINTCENTRAL BANKCENTRAL BANK INDEPENDENCECENTRAL BANKINGCENTRAL BANKSCOMMERCIAL BANKSCOMPETITIVENESSCONSUMERSCOST OF CAPITALCREDIBILITYCREDIT EXPANSIONCREDIT GROWTHDEBTDECISION MAKINGDEFICITSDEMAND FOR MONEYDEPOSITSDEVELOPING COUNTRIESDEVELOPING COUNTRYDURABLESECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTSECONOMIC HISTORIANSECONOMIC SITUATIONECONOMIC THEORYECONOMIC VOLATILITYEMERGING MARKETEMERGING MARKET COUNTRIESENVIRONMENTAL BENEFITSEQUILIBRIUMEQUILIBRIUM VALUESEQUIPMENTEUROPEAN CENTRAL BANKEXCHANGE RATEEXCHANGE RATESEXPECTED RETURNSEXTERNAL COMPETITIVENESSFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CRISISFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL STABILITYFISCAL POLICIESFISCAL POLICYFORECASTSFUTURE PRICEGROWTH RATEGROWTH RATESGROWTH THEORYHOLDINGHOLDINGSHOUSINGHOUSING PRICESINCOMEINDEBTEDNESSINFLATIONINFLATION EXPECTATIONSINFLATION RATEINFLATION RATESINFLATION TARGETINFLATION TARGETINGINFLATION TARGETSINFLATION TAXINFLATIONARY PRESSUREINFORMATION ASYMMETRIESINSTRUMENTINSURANCEINTERBANK MARKETSINTEREST RATEINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINTERNATIONAL FINANCIAL INTEGRATIONINVESTMENT SPENDINGJURISDICTIONLENDERLENDER OF LAST RESORTLIABILITYLIQUIDITYLOANLOW INTEREST RATESMACROECONOMICSMARGINAL COSTMARGINAL COSTSMARGINAL PRODUCTMARKET CONDITIONSMARKET FAILURESMARKET PARTICIPANTSMARKET PRICESMATURITYMONETARISTSMONETARY ECONOMICSMONETARY POLICIESMONETARY POLICYMONEY CREATIONMONEY GROWTHMONEY MARKETMONEY MARKETSMONEY SUPPLYMONOPOLYMORAL HAZARDNATURAL RESOURCESNOMINAL INTEREST RATEOPEN MARKETOPEN MARKET OPERATIONSOPPORTUNITY COSTOUTPUTOUTPUT GAPPHILLIPS CURVEPOLITICAL ECONOMYPRESENT VALUEPRICE CHANGESPRICE LEVELSPRICE SETTINGPRICE STABILITYPROFITABILITYPUBLIC DEBTPUBLIC FINANCEPUBLIC POLICYPUBLIC SECTORPURCHASING POWERRAPID ECONOMIC GROWTHRATE OF INFLATIONREAL GDPREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESREGIONAL INTEGRATIONRELATIVE PRICERESERVE BANKRESERVE BANK OF AUSTRALIARESERVESRETURNRISE IN INFLATIONSEIGNIORAGESHORT TERM INTEREST RATESHORT TERM INTEREST RATESSMALL BANKSSOCIAL VALUESOLVENCYSTOCK PRICESSUBSIDIARYSYSTEMIC RISKSTAXTAX POLICYTAX RATETAX RATESTAX REVENUESTAXATIONTRANSPARENCYTREASURIESTREASURYUNEMPLOYMENTVALUE OF COLLATERALWAGESWEALTHWEALTH EFFECTWORLD ECONOMYYIELD CURVEWorking PaperWorld Bank10.1596/28003