Controlling the Price Level
AbstractGovernments determine the size of the unit of value just as they determine the length of the length and weight of physical units of measure. What are the different ways that a government can control the size of the unit of value, that is, control the price level? In general, the government designates a resource gold, paper currency, another country's currency and defines its unit of value as a particular amount of that resource. An interesting variant proposed by Irving Fisher in 1913 and implemented more recently in Chile is to alter the resource content of the unit to stabilize the price level. Another idea is to alter the interest rate paid on reserves in a way that stabilizes the price level.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6914.
Date of creation: Jan 1999
Date of revision:
Publication status: published as Contributions to Macroeconomics, (The B.E. Journal of Macroeconomics), Vol. 2: Iss. 1, Article 5 (2002)
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Other versions of this item:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-02-08 (All new papers)
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