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A Monetary Impulse Measure for Medium-Term Policy Analysis


  • Bennett T. McCallum
  • Monica Hargraves


The paper presents a measure of monetary impulse that is intended to reflect the medium-term inflationary implications of a nation’s current monetary policy. The measure consists of the growth rate of the monetary base, adjusted for reserve requirement changes and augmented by an implicit forecast of future growth rates of base velocity. Time series plots of the impulse measure for the G-7 countries are presented, and are compared with plots of inflation and of two alternative monetary indicators—the yield curve slope and the growth rate of a broad monetary aggregate. The impulse measure serves well as a medium-term indicator of future inflation, and on balance matches or outperforms the alternative indicators.

Suggested Citation

  • Bennett T. McCallum & Monica Hargraves, 1994. "A Monetary Impulse Measure for Medium-Term Policy Analysis," IMF Working Papers 94/146, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:94/146

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    References listed on IDEAS

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    Cited by:

    1. Aaron Mehrotra & Tomáš Slacík, 2009. "Evaluating Inflation Determinants with a Money Supply Rule in Four Central and Eastern European EU Member States," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 6-21.
    2. Richard G. Anderson & Robert H. Rasche, 2001. "Retail sweep programs and bank reserves, 1994-1999," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 51-72.
    3. Mehrotra, Aaron & Sánchez-Fung, José R., 2011. "Assessing McCallum and Taylor rules in a cross-section of emerging market economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(2), pages 207-228, April.
    4. Armine Khachatryan & David A. Grigorian & Grigor Sargsyan, 2004. "Exchange Rate, Money, and Wages; What is Driving Prices in Armenia?," IMF Working Papers 04/229, International Monetary Fund.


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