Monetary policy and recent business-cycle experience
Some critics of recent monetary policy have focused on slow M2 growth, claiming that the Federal Reserve is too interested in price stability and is forsaking its growth mandate. Others criticize the Fed for achieving price stability too cautiously and urge the adoption of a rule that seeks to eliminate inflation more quickly. ; R. W. Hafer, Joseph Haslag and Scott Hein examine two alternative monetary policies and gauge their expected impacts on economic activity. Both policies are simulated over the period 1987–92. One policy, a GNP-targeting rule similar to one proposed by Bennett McCallum, slows nominal GNP growth substantially. Simulated nominal GNP, however, is quite volatile under the GNP-targeting rule. The other policy, referred to in the article as the M2-targeting approach would have resulted in somewhat faster average nominal GNP growth compared with what actually occurred, the start-and-stop pattern exhibited during the recent U.S. recovery would still be present. Thus, the evidence indirectly supports the notion that real shocks were the driving force behind recent weakness in economic activity.
Volume (Year): (1994)
Issue (Month): Q III ()
|Contact details of provider:|| Web page: http://www.dallasfed.org/|
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
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.:
- Mccallum, Bennet T., 1988. "Robustness properties of a rule for monetary policy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 29(1), pages 173-203, January.
- R. W. Hafer & Scott E. Hein, 1983.
"Predicting the money multiplier: forecasts from component and aggregate models,"
1983-012, Federal Reserve Bank of St. Louis.
- Hafer, R. W. & Hein, Scott E., 1984. "Predicting the money multiplier : Forecasts from component and aggregate models," Journal of Monetary Economics, Elsevier, vol. 14(3), pages 375-384, November.
- Karl Brunner, 1968. "The role of money and monetary policy," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 8-24.
- Duca, John V., 1993. "RTC activity and the 'missing M2'," Economics Letters, Elsevier, vol. 41(1), pages 67-71.
- R.W. Hafer & Joseph H. Haslag & Scott E. Hein, 1991. "Evaluating monetary base targeting rules," Research Paper 9104, Federal Reserve Bank of Dallas.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- Michelle R. Garfinkel & Daniel L. Thornton, 1991. "The multiplier approach to the money supply process: a precautionary note," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 47-64.
When requesting a correction, please mention this item's handle: RePEc:fip:fedder:y:1994:i:qiii:p:14-28. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Chapman)
If references are entirely missing, you can add them using this form.