I. Introduction 17
I. Introduction At the beginning of the 21st century, after the wide-scale collapse of centrally planned economies, the consensus perception prevails that prosperity and eco- nomic growth are generated by private enterprise and free markets. Neverthe- less, government policy has maintained its role as a major factor, responsible for creating the necessary conditions for promoting enterprise and growth. In this context, monetary policy has emerged as an important means for achieving these goals1. The arguments for this statement are twofold, concerning both how quickly and how accurately the intervention takes effect on the market. In the first place, unlike fiscal policy, which often serves multiple (sometimes conflict- ing) goals and may be subject to political influences and lengthy legislative de- cision-making and approval procedures, monetary policy conducted by an inde- pendent central bank can be adjusted relatively quickly to respond to the latest macroeconomic developments. Furthermore, the impact of monetary impulses especially on the financial markets under a sufficient degree of central bank credibility takes place immediately. Sometimes the financial market response even precedes the actual central bank intervention, as market participants antici- pate the envisaged measures and act accordingly in advance. The last decades have witnessed major transformations pertaining to both monetary policy theory and practice. Since the Bretton Woods collapse central banks exposed not only to a higher degree of freedom, but also to the need to define clear monetary policy goals and communicate them to the public. In the last two decades, a growing number of central...
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