| Summary: | This paper considers the role of money, particularly the role of monetary analysis in monetary policy-making. During the last three decades, many central banks changed their monetary policy considerably. In the late 1970s money and the long-run effects of its movements on inflation were in the center-stage of economic policy. Given the breakdown of the relationship between monetary aggregates and goal variables such as inflation, many countries in the world have recently adopted inflation targeting as their monetary policy regime. The direct control of money supply lost importance. Central bankers operate in an environment of high uncertainty regarding the functioning of the economy. In such a complex environment, a single model or a limited set of indicators is not a sufficient guide for monetary policy. Monetary aggregates continue to be an important indicator variable concludes the author.
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