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Towards A More Neutral Monetary Policy: Proposal Of A Nominal Income Rule

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  • Juan E. Castañeda Fernández

Abstract

Most central banks follow either an implicit or explicit inflation target. Many leading economists promote an active role for central banks in pursuit of that target. In this article it is shown how that strategy does not necessarily lead to a neutral monetary policy and, therefore, to the smooth working of markets in the long run. Accordingly, it proposes a nominal income rule that removes monetary disturbances from the economy.

Suggested Citation

  • Juan E. Castañeda Fernández, 2005. "Towards A More Neutral Monetary Policy: Proposal Of A Nominal Income Rule," Economic Affairs, Wiley Blackwell, vol. 25(4), pages 61-67, December.
    • Handle: RePEc:bla:ecaffa:v:25:y:2005:i:4:p:61-67
    DOI: 10.1111/j.1468-0270.2005.00593.x
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    References listed on IDEAS

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