On Defining and Controlling Money

There appears to be a consensus on the philosophy underlying the Bank of Canada's new policy thrust. White's contention that the theoretical and policy debate centers increasingly on such issues as which monetary aggregate should be controlled and whether or not the Bank should attempt to exert control via interest rates or the monetary base is valid. At several places in his analysis, White relies too much on data gathered by the current operating procedures and institutional mileu to derive implications that would hold under alternative procedures and arrangements.The bulk of the analysis in White's paper is empirically rooted, and most of the evidence he marshals both against a broad definition of money and against base control is motivated by research which reflects the current institutional framework and therefore, does not need to imply much about the system under differing operational scenarios.