Search Results
Journal Article
After the accord : reminiscences on the birth of the modern Fed
Working Paper
The formulation of monetary policy
The purpose of this paper is to elucidate the way in which current institutional arrangements shape the character of monetary policy. It is emphasized that the Fed, in order to preserve its independence, formulates monetary policy in a way that prevents the formation of coalitions within the government that could threaten its independence. As a consequence, the Fed, in general, attempts to balance multiple, changing objectives. This attempt leads to the demand for "flexibility," an absence of precommitment. Much of the paper is devoted to a discussion of the way in which the Fed's desire to ...
Journal Article
Making the systematic part of monetary policy transparent
Working Paper
Allan Meltzer: How He Underestimated His Own Contribution to the Modern Concept of a Central Bank
In his great work A History of the Federal Reserve System, vol. 1, Allan Meltzer contended that monetary policymakers in the Depression simply ignored the quantity theoretic prescriptions that would have prevented contractionary monetary policy. Practically, he was arguing that the Fed should have accepted the responsibilities for economic stabilization now taken for granted with the modern concept of a central bank. In reality, decades of monetarist criticism had to pass before the Fed accepted both responsibility for the behavior of the price level and economic stabilization. In effect, ...
Working Paper
The Evolution of U.S. Monetary Policy
Since the establishment of the Federal Reserve System in 1913, policymakers have always pursued the goal of economic stability. At the same time, their understanding of the world and of the role of monetary policy has changed dramatically. This evolution of views provides a laboratory for understanding what kinds of monetary policy stabilize the economy and what kinds destabilize it.
Journal Article
What difference would inflation make?
Journal Article
Maintaining price stability: a proposal
The Neal Resolution, now in Congress, would make price stability the dominant goal of monetary policy. The first of these two articles holds that policymakers discretion over the price level increases political conflict. Further, it argues that removing this discretion would restore the dollar to the role envisioned by the Framers of the Constitution. The second article proposes an instrument for measuring inflation expected by the market and argues that such a measure would encourage monetary policy-makers to maintain price stability.
Working Paper
ECB monetary policy in the recession: a New Keynesian (old monetarist) critique
Use of the New Keynesian model to identify shocks points to contractionary monetary policy as the cause of the Great Recession in the Eurozone.
Working Paper
A Proposal to Clarify the Objectives and Strategy of Monetary Policy
Academic economists have perennially made arguments for the conduct of monetary policy constrained by an explicit rule. These arguments have gone nowhere. This paper advances a proposal to clarify Fed objectives and strategy in order to facilitate discussion leading to consensus over a desirable rule. Economists are likely to have more success in their quest for a rule if they follow the indirect strategy of pushing the Fed for more transparency about the systematic character of policy.