Economic Theory And Monetary Policy

Monetary policy has always reported itself to a certain theoretic vision on the way of structuring and functioning of the world economic system. Using this relationship as our starting point, we will try to make a brief analysis of the monetary policies of the highly developed states in the post-war period, with reference to the main theories that have dominated successively the economic thinking of the 20th century. We have analysed the theoretical considerations outlined within the most representative theories from the view point of the resulting practical conclusions to the elements responsible for the elaboration and creation of the economic and, implicitly, monetary policy. We stopped particularly upon the role of the state and of its main economic policy instruments: the public budget and the legislative institution. In order to understand these policies. we have set out to identify the main theoretical landmarks that they were related to and to analyse the viability of those policies with reference to the arguments provided by our theoretical interpretations, while attempting to assess the strength of the theoretical support of those arguments. We sum it up with the conclusion provided by these analyses, which is that the balance of money is only one of the prerequisites of economic health, but not a self-sufficient one. The health and stability of the banking system are equally important