We study the properties of alternative central bank targeting procedures in a general equilibrium monetary model of the US economy with labour contracts, endogenous velocity and three shocks: money demand, supply and fiscal. Money demand -velocity- shocks emerge as the main sources of macroeconomic volatility. Consequently, nominal interest rate targeting results in greater stability than money targeting. Interestingly this holds independently of the type of the shock (unlike Poole). Interest rate targeting also generates a higher level of welfare.
|Date of creation:||Aug 2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
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.:
- Charles T. Carlstrom & Timothy S. Fuerst, 1995.
"Interest rate rules vs. money growth rules: a welfare comparison in a cash-in-advance economy,"
9504, Federal Reserve Bank of Cleveland.
- Carlstrom, Charles T. & Fuerst, Timothy S., 1995. "Interest rate rules vs. money growth rules a welfare comparison in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 247-267, November.
- Gray, Jo Anna, 1976. "Wage indexation: A macroeconomic approach," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 221-235, April.
- Marvin Goodfriend & David H. Small(), 1993. "Operating procedures and the conduct of monetary policy: conference proceedings," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
- 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.
- Canzoneri, Matthew B & Dellas, Harris, 1996. " Monetary Integration in Europe: Implications for Real Interest Rates and Stock Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(4), pages 541-47, December.
- Canzoneri, Matthew B & Dellas, Harris, 1995.
"Real Interest Rates and Central Bank Operating Procedures,"
CEPR Discussion Papers
1099, C.E.P.R. Discussion Papers.
- Canzoneri, Matthew B. & Dellas, Harris, 1998. "Real interest rates and central bank operating procedures," Journal of Monetary Economics, Elsevier, vol. 42(3), pages 471-494, October.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:2521. 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: ()The email address of this maintainer does not seem to be valid anymore. Please ask to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.