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Optimal monetary policy design: rules versus discretion again


  • A. Steven Englander


Should monetary authorities rely primarily on rules or their own discretion in conducting monetary policy? The debate has recently been revived by researchers who claim that discretionary monetary policy tempts policy makers to exploit a short-run trade-off between output and inflation and thereby leads to higher inflation expectations. This article evaluates the arguments advanced in support of these views and tests them against the empirical evidence.

Suggested Citation

  • A. Steven Englander, 1990. "Optimal monetary policy design: rules versus discretion again," Quarterly Review, Federal Reserve Bank of New York, issue Win, pages 65-79.
  • Handle: RePEc:fip:fednqr:y:1990:i:win:p:65-79:n:v.15no.3-4

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    References listed on IDEAS

    1. Ando, Albert & Auerbach, Alan J., 1988. "The cost of capital in the United States and Japan: A comparison," Journal of the Japanese and International Economies, Elsevier, vol. 2(2), pages 134-158, June.
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    Cited by:

    1. Charles A. E. Goodhart & Jose Vinals, 1994. "Strategy an tactics of monetary policy: examples from Europe and the Antipodes," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 38, pages 139-194.

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    Monetary policy ; Inflation (Finance);


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