AbstractWe study the properties of alternative central bank targeting procedures in a general equilibrium, monetary model of the US economy with labor contracts, endogenous velocity and three shocks: money demand, supply and fiscal. Money demand – velocity – shocks emerge as the main source of macroeconomic volatility. Nominal interest rate targeting results in greater stability than money targeting. Interestingly, this holds independently of the type of the shock (unlike Poole). Interest rate targeting also generates a higher level of welfare.
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Bibliographic InfoArticle provided by Intersentia in its journal Review of Business and Economic Literature (ReBEL).
Volume (Year): LVI (2011)
Issue (Month): 4 (December)
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central bank operating procedures; money targeting; interest targeting; macroeconomic stability; monetary policy and welfare;
Other versions of this item:
- Collard, Fabrice & Dellas, Harris & Ertz, Guy, 1998. "Poole Revisited," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1998023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Collard, Fabrice & Dellas, Harris & Ertz, Guy, 2000. "Poole Revisited," CEPR Discussion Papers 2521, C.E.P.R. Discussion Papers.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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