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Eurosystem Monetary Targeting: Lessons from U.S. Data

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Author Info
Glenn D. Rudebusch
Lars E.O. Svensson

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Abstract

Using a small empirical model of inflation, output, and money estimated on U.S. data, we compare the relative performance of monetary targeting and inflation targeting. The results show that monetary targeting would be quite inefficient, with both higher inflation and output variability. This is true even with a deterministic money demand formulation. In this framework, there is thus no support for the prominent role given to money growth in the Eurosystem's monetary policy strategy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7179.

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Date of creation: Jun 1999
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Publication status: published as Rudebusch, Glenn D. and Lars E. O. Svensson. "Eurosystem Monetary Targeting: Lessons From U.S. Data," European Economic Review, 2002, v46(3,Mar), 417-442.
Handle: RePEc:nbr:nberwo:7179

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Find related papers by JEL classification:
E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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