The author analyzes the choice of monetary policy rule in a perfect-foresight-planning model. Maximizing agents plan their lifetime consumption decisions in the face of two rigidities. First, households hold money to aid trade. Second, today's price level is inherited from past contracting decisions so that changes in nominal aggregate demand fall on output in the short run. Given these rigidities, the central bank can set real balances in the short run and the author compares two mu = percent rules. His theoretical results suggest that the choice between fixed-money-growth and fixed-nominal-income-growth rules is an empirical assessment that depends on the distribution of shocks to the economy. Copyright 1990 by Ohio State University Press.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. 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.
Did you know? You can create a compilation of all publications of a group of people, say alumni of a program, your students or memers of an association.