Indonesian monetary policy during the 1997-98 crisis: a monetarist perspective
This paper defends the IMF's strategy of targeting base money (MO) in 1997-98 against the criticism by Grenville (2000) that it was destined to fail because MO is mainly demand determined and the demand for it was increased by a large and unpredictable amount by the banking panic. Grenville contends that Indonesian monetary policy should have aimed at domestic price stability. It is argued here that the growth of MO far exceeded what could be justified by last resort lending to accommodate the...[Show more]
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