In monetary economics, the money multiplier is the ratio of the money supply to the monetary base (i.e. central bank money). If the money multiplier is stable, it implies that the central bank can control the money supply by determining the monetary base.
In some simplified expositions, the monetary multiplier is presented as simply the reciprocal of the reserve ratio, if any, required by the central bank. More generally, the multiplier will depend on the preferences of households, the legal regulation and the business policies of commercial banks - factors which the central bank can influence, but not control completely.
Because the money multiplier theory offers a potential explanation of the ways in which the central bank can control the total money supply, it is relevant when considering monetary policy strategies that target the money supply. Historically, some central banks have tried to conduct monetary policy by targeting the money supply and its growth rate, particularly in the 1970s and 1980s. The results were not considered satisfactory, however, and starting in the early 1990s, most central banks abandoned trying to steer money growth in favour of targeting inflation directly, using changes in interest rates as the main instrument to influence economic activity. As controlling the size of the money supply has ceased being an important goal for central bank policy generally, the money multiplier parallelly has become less relevant as a tool to understand current monetary policy. It is still often used in introductory economic textbooks, however, as a simple shorthand description of the connections between central bank policies and the money supply.
economics, the moneymultiplier is the ratio of the money supply to the monetary base (i.e. central bank money). If the moneymultiplier is stable, it...
affect, but not control the money supply. The fractional reserve theory where the money supply is limited by the moneymultiplier has come under increased...
close to M4 + Bankers' Acceptance MoneyMultiplier: M1 / MB. As of December 3, 2015, it was 0.756. While a multiplier under one is historically an oddity...
In economics, the fiscal multiplier (not to be confused with the moneymultiplier) is the ratio of change in national income arising from a change in government...
The moneymultiplier theory presents the process of creating commercial bank money as a multiple (greater than 1) of the amount of base money created...
Multiplier may refer to: Look up multiplier or multipliers in Wiktionary, the free dictionary. Multiplier (arithmetic), the number of multiples being...
Under this view, the moneymultiplier compounds the effect of bank lending on the money supply. The multiplier effect on the money supply is governed by...
loan-making, a ratio called the moneymultiplier. However, for those that do not agree with the theory of the moneymultiplier, the monetary base can be thought...
circuitism rejects, among other things, the moneymultiplier based on reserve requirements, arguing that money is created by banks lending, which only then...
Index Gary Sorenson Get-rich-quick scheme Matrix scheme Minsky moment Moneymultiplier Non-fungible token Saradha Group financial scandal Steven Hoffenberg...
expansion of the broad money supply through the extension of credit by banks. MMT economists regard the concept of the moneymultiplier, where a bank is completely...
a higher moneymultiplier, corresponding to a tendency of the financial system to create more broad money for a given quantity of base money), plans to...
rate set by the central bank. This inverts the mainstream textbook moneymultiplier relationship between deposits and loans since loans are said to cause...
motivation moving equilibrium theorem multipliermultiplier uncertainty Any lack of perfect knowledge of the multiplier effect of a particular policy action...
the moneymultiplier, and is greater than 1), while in a full-reserve banking loans must be precisely backed by reserves and the moneymultiplier is 1...
of the multiplier in Chapter 10 with a reference to Kahn's earlier paper (see below). He designates Kahn's multiplier the "employment multiplier" in distinction...
(September 2021). "Teaching the Linkage Between Banks and the Fed: R.I.P. MoneyMultiplier". research.stlouisfed.org. Retrieved August 10, 2023. Ihrig, Jane;...
(September 2021). "Teaching the Linkage Between Banks and the Fed: R.I.P. MoneyMultiplier". research.stlouisfed.org. Federal Reserve Bank of St. Louis. Retrieved...
the air with Air Multiplier technology. In January 2016, Dyson released the Dyson Pure Cool air purifier. It uses the same Air Multiplier technology to blow...
Aggregates MZM Velocity of MZM Money Stock M MULT Monetary Aggregates M1 M1 MoneyMultiplier M PPIACO Producer Prices PPI Producer Price Index: All Commodities...
non-monetary controls on inflation Reserve requirements which affect the moneymultiplier Policy is generally directed to achieve particular objectives, like...
The local multiplier effect (sometimes called the local premium) is the additional economic benefit accrued to an area from money being spent in the local...
economic life. Worried depositors started to withdraw savings, so the moneymultiplier worked in reverse. Banks were forced to liquidate assets (such as calling...
(September 2021). "Teaching the Linkage Between Banks and the Fed: R.I.P. MoneyMultiplier". research.stlouisfed.org. Federal Reserve Bank of St. Louis. Retrieved...
reserves. Taken together, it reduces the moneymultiplier which, multiplied by the amount of base money, gives the money supply. This equation shows the relation:...
Global Information