Journal Article
The case for rules in the conduct of monetary policy: a concrete example
Abstract: A policy rule can be activist; the distinction between rules and discretion depends on the stage at which optimization calculations enter the policy process. Here a specific monetary rule is proposed, one that sets the monetary base each quarter in a manner designed to keep nominal aggregate demand growing smoothly at a noninflationary rate. Simulations with a simple estimated model suggest that the proposed rule would have performed well over the period 1954-85, despite financial innovations and regulatory change.
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Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Economic Review
Publication Date: 1987
Volume: 73
Issue: Sep
Pages: 10-18