A survey of annual reports published by Central Banks or prepared by Council of Experts yields many propositions bearing on the structure or response patterns of monetary systems, or the role and significance of monetary policy. Money stock and other monetary aggregates are disconnected from domestic monetary policies. These policies are effectively offset by induced capital flows. The movements of money stock, bank credit and interest rates emerge from the interaction of banks and public on the credit market in response to the behaviour of the monetary authorities. The analytic framework for the clarification of propositions about the role of monetary policy in an open economy has been constructed. It has been argued that monetary policy cannot be used to control economic activity in an economy enmeshed in the relations of interdependent national credit markets. The discussions of monetary policy in an open economy have centered on endogeneity and responsiveness of the volume of base money or the adjusted base.

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