Optimal Control of the Money Supply
Using optimal control theory and a vector autoregressive representation of the relationship between money and interest rates, one can derive a feedback control procedure which defines the best possible tradeoff between interest rate volatility and money supply fluctuations and which could be used to reduce both from their current levels.
|Date of creation:||Jun 1982|
|Date of revision:|
|Publication status:||published as Quarterly Review, Federal Reserve Bank of Minneapolis, Fall 1982, 6(3): 1-9.|
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- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
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