Monetary policy in the glossary

Posted on March 3 2023

A period of intense concentration has resulted in the addition of a pile of entries on monetary policy in the glossary.

Together coming to more than 3,000 words, the right order of reading is probably as follows:

I also added:

I have decided not to post these here as duplicates of the glossary entries but please feel free to make comments as these as they are really key items. If you think redrafting is required please copy the glossary entry into Word, edit it there and send it to me with track changes on using glossary@taxresearch.org.uk.

I put a lot of effort into these as I realise that I have a discriminating readership after posting earlier items (some of which still require updating, which I will get to) and am demanding more of myself as a result. Trust me, defining some of these things was not easy.

I also hope the critiques, especially in the posts on conventional monetary policy and unconventional monetary policy are of use.

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8 Responses

  1. Pilgrim Slight Return says:
    March 3 2023 at 9:24 am

    Thanks for letting us know – it looks like an excellent resource to pull on.

  2. James Twining says:
    March 3 2023 at 10:27 am

    The one for Real Interest Rate reminded me of the Paul Mason definition of neo-liberalism because it’s self-referential.
    Amusement aside, a mention of negative real interest rates would be helpful as this is what we currently have in the UK.

  3. CLIVE PARRY says:
    March 3 2023 at 10:39 am

    Slightly uncomfortable with “Effective interest rate”. As a bond trader this has a very precise meaning – the weighted average o/n rate on a particular day. For example Effective Fed Funds rate. In my experience only “Real interest rate” is the term used…. but if “Effective interest rate” is used interchangeably with Real interest in other circles then do ignore me.

    On “Real Rate” I think it is important to emphasis that the real rate is defined by looking at rates that cover the same period.
    Today’s 1 year real rate is NOT minus 6% because the expected inflation rate for 2023 is NOT 10%….. I think your definition is correct but this point could be more explicit. Interest Rates “look forward; Inflation rates look backwards”.

    • Richard Murphy says:
      March 3 2023 at 2:35 pm

      I agonised over this.

      In the circles I work in effective and real interest rates are sufficiently close to be akin for the glossary.

      I will look again at real interest rates

  4. CLIVE PARRY says:
    March 3 2023 at 10:45 am

    Base Rate is a term only used in the UK. Other Central banks use different terms. So, I would alter your definition to make it UK specific with a corollary that other Central banks operate similarly.
    EG. The ECB sets two rates – its Deposit facility (equiv of Base Rate) and Marginal lending rate (where banks can borrow (v collateral)

  5. Ian Tresman says:
    March 3 2023 at 4:42 pm

    “the right order of reading is probably as follows”

    So it occurs to me that a glossary is a difficult read as a stand-alone compilation of terms. But some additional thematic entries would allow you to give people “starting points” containing links to the appropriate entries in the right order.

    “How does the government fund spending”
    “What’s the point of taxes”
    “Why does spending not necessarily cause inflation”
    etc