From what I've read Central banks, broadly speaking, moved away from targeting monetary aggregates despite fairly robust monetarist arguments. I understand the basic theoretical idea that if money supply growth is controlled, nominal GDP/inflation should be more predictable via a stable velocity relationship. But then this approach seems to have been largely abandoned by the 1980s and 1990s in favour of interest rate targeting and, later, inflation targeting frameworks.
So then, what were the empirical failures or constraints that made monetary aggregate targeting unworkable in practice, despite its theoretical appeal in monetarist frameworks?
Why did central banks abandon monetary aggregates as policy targets despite monetarist recommendations?
byu/aabccdg inAskEconomics
Posted by aabccdg