No wonder it’s hard to interpret monetary statistics

Who would be a monetarist these days? Most monetary policy types are scrambling to re-estimate behavioural relationships.

And then there are the window-dressing operations, which are now revealed to have been exceptionally large in Ireland around the time the Government had to rescue the banks at end-September 2008.

No wonder it is hard to make sense of deposit and monetary movements at that time. In a footnote at my paper in the crisis conference I was reduced to hand-waving: “It is striking that these events have not left a very prominent track on the monetary aggregates. The evidence of a cash crunch at end-September is very muted…though of course we do not have day-by-day figures for the last week in September).”

Now we begin to know why.

5 thoughts on “No wonder it’s hard to interpret monetary statistics”

  1. I must say it is not surprising that the goverment are keeping things so quiet surrounding the affairs of Anglo Irish. All of these antics that have gone on are truley disgracefull and I am sure there is allot more to come out yet.

    It really is quite embarrasing to be honest to see this happening and the way the goverment have tried to cover it up to protect our image. It just makes it worse when it comes out in bits and pieces and makes it all the more sinister.

    As far as behavioural relationships and monetary policy go, for Ireland the relationship between the people and the policy makers is gone. No policy this current government make will have the desired effect because nobody trusts them. It that simple in my opinion.

  2. I don’t agree with you.

    These events have left a “prominent track on the monetary aggregates”. Broad money supply (M3) has been shrinking (on a year-on-year basis) since April 2008.

  3. Patrick: you mean..”Now we KNOW why”
    Talking about behavioural relationships have any of you ecomists considered the relationship between the sacred cow of so called “performance related” remuneration, and the crisis we are now in. In my experience this type of reward system generates mini industry within corporations of all kinds, where vast amounts of time and effort is spent arranging and rearranging figures to enhance performance related bonuses. Maybe it is time to scrap this sort of remuneration entirely, given that it seems impossible to devise a model which is independent of manipulation, and unfortunately it seems the higher echelons of our management are not quite as trustworthy as previously supposed.

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