Examining China: Monetary Policy, Inflation Potential, and the Organization of the Monetary System Under a Floating Exchange Rate System
Abstract
When it comes to monetary policy and inflation, we are quite fond of making two complementary statements. The first one is that we believe that inflation is a monetary phenomenon. To get a sense of the inflation rate, all we need to determine is the growth rate of the monetary aggregates relative to the demand for these aggregates. The second statement that we are also fond of making when discussing monetary matters is that the organization of the monetary system determines the inflation potential of an economy. The reason for this is that the organization of the monetary system may impose ...
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