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Author:Eichenbaum, Martin S. 

Working Paper
Inside money, outside money and short term interest rates

Working Paper Series, Macroeconomic Issues , Paper 95-13

Conference Paper
Dynamic effects of monetary policy; a conference sponsored by the Federal Reserve Bank of Cleveland, November 6-8, 1996.

Proceedings , Issue Nov

Working Paper
Expectation traps and discretion

We argue that discretionary monetary policy exposes the economy to welfare-decreasing instability. It does so by creating the potential for private expectations about the response of monetary policy to exogenous shocks to be self-fulfilling. Among the many equilibria that are possible, some have good welfare properties. But, others exhibit welfare decreasing volatility in output and employment. We refer to the latter type of equilibria as expectation traps. In effect, our paper presents a new argument for commitment in monetary policy because commitment eliminates these bad equilibria. We ...
Working Paper Series, Macroeconomic Issues , Paper WP-96-5

Working Paper
Expectations, traps and discretion

We argue that discretionary monetary policy exposes the economy to welfare-decreasing instability. It does so by creating the potential for private expectations about the response of monetary policy to exogenous shocks to be self-fulfilling. Among the many equilibria that are possible, some have good welfare properties. But, others exhibit welfare decreasing volatility in output and employment. We refer to the latter type of equilibria as expectation traps. In effect, our paper presents a new argument for commitment in monetary policy because commitment eliminates these bad equilibria. ...
Working Papers in Applied Economic Theory , Paper 96-04

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