ABSTRACT
An important question for the formulation of monetary policy by a central bank concerns the appropriate variables on which it can focus as indicators of the need for such a policy. Such variables provide information on the current and future state of the economy, especially of the goal variables, and are known as policy guides. A variable selected as a policy guide is also sometimes used as a target variable, i.e. one whose value the central bank seeks to influence or control directly by the use of the tools at its disposal. Since the guide variable reflects the state of the economy, its value must also change if a policy changes that state, so that the guides are directly or indirectly functions ofthe policy instruments.
