The Role of Output Stabilization in the Conduct of Monetary Policy
AbstractThis paper examines the role of output stabilization in the conduct of monetary policy. It argues that activist monetary policy--in which the monetary authorities focus on output fluctuations in the setting of their policy instrument and in policy statements--is likely to produce worse outcomes for output and inflation fluctuations, because it will lead to suboptimal monetary policy, but also because it complicates monetary authorities' communication strategy and can weaken the credibility of the central bank. In contrast, conducting monetary policy with a flexible inflation target rule is likely to produce better outcomes. A flexible inflation target rule also allows the monetary authorities to communicate effectively to the public that they do care about output fluctuations, but makes it less likely that they will be encouraged to try to exploit the short-run trade-off between output and inflation. Copyright 2002 by Blackwell Publishers Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal International Finance.
Volume (Year): 5 (2002)
Issue (Month): 2 (Summer)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1367-0271
Other versions of this item:
- Frederic S. Mishkin, 2002. "The Role of Output Stabilization in the Conduct of Monetary Policy," NBER Working Papers 9291, National Bureau of Economic Research, Inc.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Forte, Antonio, 2009.
"The pass-through effect: a twofold analysis,"
16527, University Library of Munich, Germany.
- Asongu Simplice, 2013.
"Does Money Matter in Africa? New Empirics on Long- and Short-run Effects of Monetary Policy on Output and Prices,"
13/005, African Governance and Development Institute..
- Asongu, Simplice A, 2013. "Does Money Matter in Africa? New Empirics on Long- and Short-run Effects of Monetary Policy on Output and Prices," MPRA Paper 48494, University Library of Munich, Germany.
- Starr, Martha A., 2005. "Does money matter in the CIS? Effects of monetary policy on output and prices," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 441-461, September.
- Geiger, Michael, 2006. "Monetary Policy in China (1994-2004) : Targets, Instruments and their Effectiveness," W.E.P. - WÃ¼rzburg Economic Papers 68, University of Würzburg, Chair for Monetary Policy and International Economics.
- Asongu Simplice, 2013.
"Correcting inflation with financial dynamic fundamentals: which adjustments matter in Africa?,"
13/003, African Governance and Development Institute..
- Asongu, Simplice A, 2012. "Correcting inflation with financial dynamic fundamentals: which adjustments matter in Africa?," MPRA Paper 46424, University Library of Munich, Germany, revised 14 Apr 2013.
- Asongu Simplice, 2013.
"How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices,"
13/013, African Governance and Development Institute..
- Asongu, Simplice A, 2013. "How would monetary policy matter in the proposed African monetary unions? Evidence from output and prices," MPRA Paper 48496, University Library of Munich, Germany.
- Lars E.O. Svensson, 2004. "Targeting Rules vs. Instrument Rules for Monetary Policy: What is Wrong with McCallum and Nelson?," NBER Working Papers 10747, National Bureau of Economic Research, Inc.
- Asongu, Simplice A, 2013.
"New Empirics of monetary policy dynamics: evidence from the CFA franc zones,"
48495, University Library of Munich, Germany.
- Asongu Simplice, 2013. "New Empirics of monetary policy dynamics: evidence from the CFA franc zones," Working Papers 13/016, African Governance and Development Institute..
- Lees, Kirdan, 2007. "How large are the gains to commitment policy and optimal delegation for New Zealand?," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 959-975, December.
- Gilberto Libanio, 2005. ""Good governance" in monetary policy and the negative real effects of inflation targeting in developing economies," Textos para DiscussÃ£o Cedeplar-UFMG td277, Cedeplar, Universidade Federal de Minas Gerais.
- Lars E.O. Svensson, 2005. "Targeting versus instrument rules for monetary policy: what is wrong with McCallum and Nelson?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 613-626.
- Orphanides, Athanasios, 2003.
"Historical monetary policy analysis and the Taylor rule,"
Journal of Monetary Economics,
Elsevier, vol. 50(5), pages 983-1022, July.
- Athanasios Orphanides, 2003. "Historical monetary policy analysis and the Taylor rule," Finance and Economics Discussion Series 2003-36, Board of Governors of the Federal Reserve System (U.S.).
- Hughes Hallett, Andrew & Di Bartolomeo, Giovanni & Acocella, Nicola, 2012. "A general theory of controllability and expectations anchoring for small-open economies," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 397-411.
- Gilberto Libânio, 2008. "A Note on Inflation Targeting and Economic Growth in Brazil," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211614210, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.