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Evolution of the Central bank and its monetary functions - What is its effectiveness today?
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Evolution of the Central bank and its monetary functions - What is its effectiveness today?

Roselina Kruize
Honours, Murdoch University
2012
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Abstract

This thesis paper objective is to examine the developments of monetary policy over time and to empirically test monetary policy using Milton Friedman’s Quantity Theory of Money (1956). Part one of this thesis paper aims to discuss monetary policy changes, including, the strengths and weaknesses of the various monetary policies implemented and the effects of deregulation on the effectiveness of monetary policy in Australia. The effect of the global financial crisis will be examined and whether monetary policy is still effective today in its aftermath. Part 2 of this thesis paper aims to test monetary policy in Australia using Friedman’s demand for money model. It will discuss Milton Friedman’s policy and the reasons behind the factors included in his policy. Using the Microfit program to analysis Australian statistics, this thesis paper aims to determine the effectiveness of monetary policy today and whether monetary policy can still be improved.

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