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Structural Models and Monetary Policy at the Federal Reserve Board: Last Vestiges of the Neoclassical Synthesis or Pragmatic New Consensus?

Author

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  • Giuseppe Fontana

    (University of Leeds, UK and University of Sannio, Italy)

Abstract

This paper analyses the structural models used at the Federal Reserve Board (FRB) and assesses the extent to which they reflect the modern New Consensus in Macroeconomics (NCM). It argues that the currently used FRB/US and the FRB/Global models have maintained key theoretical features of the old MPS model and Multi-Country-Model (MCM), including the transmission channels of monetary policy. However, the FRB/US and the FRB/Global encompasses major features of the NCM, namely a prominent role for expectations in the monetary policy process, the natural rate hypothesis and the unemployment bias.

Suggested Citation

  • Giuseppe Fontana, 2008. "Structural Models and Monetary Policy at the Federal Reserve Board: Last Vestiges of the Neoclassical Synthesis or Pragmatic New Consensus?," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 11(2), pages 69-88, Winter.
  • Handle: RePEc:ekn:ekonom:v:11:y:2008:i:2:p:69-88
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    Cited by:

    1. Emiliano Brancaccio & Giuseppe Fontana, 2013. "'Solvency rule' versus 'Taylor rule': an alternative interpretation of the relation between monetary policy and the economic crisis," Cambridge Journal of Economics, Oxford University Press, vol. 37(1), pages 17-33.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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