ABSTRACT
Monetary policy entails manipulation of the stock of money or interest rates to achieve some specific objectives. It presupposes the controllability of the money supply and the reliability of the relationship between money supply and the ultimate goal. However, both controllability and reliability are contentious issues in the debate about the effectiveness of monetary policy. The reliability of monetary policy crucially depends on the stability of the money demand function and this issue is examined in the next chapter. The focus of this chapter is the controllability of the money supply.
