Monetary Policy: Recent Theory and Practice
AbstractThe paper reviews the major developments of the last three decades: the rise and fall of monetarism as theory and as targeting of intermediate monetary aggregates; targeting of nominal GDP in order to escape volatility of velocity of money; the abandonment of intermediate targets as superfluous; the use of money-market interest rates as operating procedure, except in the U.S.; their replacement by reserve aggregates in 1970-82; inflation stability and price level stability as policy objectives, often exclusive of other macroeconomic goals; the U.S. Federal Reserve as aiming successfully at both low inflation and low unemployment, goals mandated by law; the rules-discretion debate; the necessity for rules conditional on economic states and the impossibility of anticipating all circumstances, thus the inevitability of discretion but in the spirit of rules; John Taylor's algebraic rule for the Federal Reserve, relating Federal Funds rate to inflation and unemployment deviation from goals.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1187.
Length: 7 pages
Date of creation: Jul 1998
Date of revision:
Publication status: Published in Helmut Wagner, ed., Current Issues in Monetary Economics, 1998, pp. 14-21
Note: CFP 975.
Contact details of provider:
Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
More information through EDIRC
Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 39(1), pages 195-214, December.
- Tobin, James, 1983. "Monetary Policy: Rules, Targets, and Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 15(4), pages 506-18, November.
- Jorg Bibow, 2001. "Making EMU Work: Some lessons from the 1990s," International Review of Applied Economics, Taylor & Francis Journals, vol. 15(3), pages 233-259.
- Hall Robert, 2002.
"Controlling the Price Level,"
The B.E. Journal of Macroeconomics, De Gruyter,
De Gruyter, vol. 2(1), pages 1-21, July.
- Dionisio Dias Carneiro & Pedro Garcia Duarte, 2001.
"Inércia de juros e regras de Taylor: Explorando as funções de resposta a impulso em um modelo de equilíbrio geral com parâmetros estilizados para o Brazil,"
Textos para discussão
450, Department of Economics PUC-Rio (Brazil).
- DionÃsio Dias Carneiro & Pedro Garcia Duarte, 2001. "InÃ©rcia de Juros e Regras de Taylor: explorando as FunÃ§Ãµes de Resposta a Impulso em Um Modelo de EquilÃbrio Geral Com ParÃ¢metros Estilizados para o Brasil," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting], ANPEC - AssociaÃ§Ã£o Nacional dos Centros de PÃ³sgraduaÃ§Ã£o em Economia [Brazilian Association of Gr 026, ANPEC - AssociaÃ§Ã£o Nacional dos Centros de PÃ³sgraduaÃ§Ã£o em Economia [Brazilian Association of Graduate Programs in Economics].
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