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.
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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.:
- Tobin, James, 1983. "Monetary Policy: Rules, Targets, and Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(4), pages 506-18, November.
- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
- Robert E. Hall, 1999.
"Controlling the Price Level,"
NBER Working Papers
6914, National Bureau of Economic Research, Inc.
- 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.
- Dionísio 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 Brasil,"
Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting]
026, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- 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 discussÃ£o 450, Department of Economics PUC-Rio (Brazil).
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