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Recent Developments in Monetary Macroeconomics and US Dollar Policy

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  • William T Gavin

Abstract

This paper summarizes the recent developments in the theory and practice of monetary policy in a closed economy and explains what these developments mean for the US dollar policy. There is no conflict between what is an appropriate US monetary policy at home or abroad, because the dollar is the world’s key currency. Both at home and abroad, the main problem for US policymakers is to provide an anchor for the dollar. Recent experience in other countries suggests that a solution is evolving in the use of inflation targets.

Suggested Citation

  • William T Gavin, 2007. "Recent Developments in Monetary Macroeconomics and US Dollar Policy," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(3), pages 49-56, August.
  • Handle: RePEc:icf:icfjmo:v:05:y:2007:i:3:p:49-56
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    1. Corsetti, Giancarlo & Pesenti, Paolo, 2005. "International dimensions of optimal monetary policy," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 281-305, March.
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    6. William T. Gavin, 2003. "Inflation targeting: why it works and how to make it work better," Working Papers 2003-027, Federal Reserve Bank of St. Louis.
    7. Refet S. Gürkaynak & Brian P. Sack & Eric T. Swanson, 2003. "The excess sensitivity of long-term interest rates: evidence and implications for macroeconomic models," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
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