Simple Rules, Discretion and Monetary Policy
In this paper we explore the possibilities arising under a policy in which a partially state contingent money-supply rule is mixed with discretion. In addition to demonstrating that such mixed strategies can dominate both complete discretion and rigid adherence to the partially state contingent rule, we investigate the appropriate setting of parameters in a partially state contingent policy when it is acknowledged that the rule will not be followed on all occasions--i.e., that sometimes the monetary authority will resort to discretion.
|Date of creation:||Apr 1989|
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- Robert J. Barro & David B. Gordon, 1983.
"Rules, Discretion and Reputation in a Model of Monetary Policy,"
NBER Working Papers
1079, National Bureau of Economic Research, Inc.
- Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
- Flood, Robert P & Garber, Peter M, 1980. "An Economic Theory of Monetary Reform," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 24-58, February.
- Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
- Stanley Fischer, 1988. "Rules Versus Discretion in Monetary Policy," NBER Working Papers 2518, National Bureau of Economic Research, Inc.
- Canzoneri, Matthew B, 1985.
"Monetary Policy Games and the Role of Private Information,"
American Economic Review,
American Economic Association, vol. 75(5), pages 1056-70, December.
- Matthew B. Canzoneri, 1983. "Monetary policy games and the role of private information," International Finance Discussion Papers 249, Board of Governors of the Federal Reserve System (U.S.).
- Bennett T. McCallum, 1987. "The case for rules in the conduct of monetary policy: a concrete example," Economic Review, Federal Reserve Bank of Richmond, issue Sep, pages 10-18.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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