Search Results
Journal Article
Monetary policy and the M2 target
An analysis of the Federal Reserve's use of the M2 monetary aggregate as both a short-term and long-term policy guide, asserting that the FOMC's tentative target range for M2 growth in 1990 permits ample opportunity for the inflation rate to either accelerate or decline during the next few years.
Working Paper
Federal reserve credibility and the market's response to the weekly M1 announcements
A presentation of new evidence on the issue of Federal Reserve System credibility, examining the response pattern of asset prices to the weekly M1 announcements under different operating procedures and monetary policy regimes.
Working Paper
The nominal facts and the October 1979 policy change
Gavin and Kydland (1999) calculated the cyclical properties of money and prices for the periods before and after the October 1979 policy change. In this article, we extend that work by adding four more years of data and including a study of nominal interest rates and inflation. The adoption of a disinflation policy in October 1979 does not appear to have had a measurable impact on the cyclical properties of real variables. However, it made a dramatic difference in the cyclical properties of nominal variables. We also examine the covariance structure of several nominal relationships: the ...
Journal Article
Inside the briefcase: the art of predicting the Federal Reserve
We all know the size of the Fed chairman's briefcase as a policy indicator is a joke. But would knowing what's inside the briefcase be of real help?
Working Paper
What do New-Keynesian Phillips Curves imply for price level targeting?
This paper extends the analysis of price level targeting to a model including the New-Keynesian Phillips Curve. We examine the inflation-output variability tradeoffs implied by optimal inflation and price level rules. In previous work with the Neoclassical Phillips Curve, we found that the choice between inflation targeting and price level targeting depended on the amount of persistence in the output gap. That is, if the output gap was not too persistent, or if lagged output did not enter the aggregate supply function, then inflation targets were preferred to price level targets. When we ...
Journal Article
Humphrey-Hawkins: the July monetary policy report
A review of the Federal Reserve System's July 1988 Monetary Policy Report to Congress, indicating a decline in the role of monetary aggregates in the policy process and including the Federal Open Market Committee's projection of economic conditions.
Journal Article
Consumer price inflation and housing prices
Working Paper
Controlling inflation after Bretton Woods: an analysis based on policy objectives
This paper reviews the inflation experience in the post-Bretton Woods era in the context of alternative central bankobjectives. It summarizes research on inflation-targeting issues, especially those associated with stabilizing the price level. Generally, inflation-targeting schemes do not provide a nominal anchor unless the central bank is focusing strictly on theinflation target and ignoring unemployment and the business cycle. Research summarized in this article suggests that themost important step a central bank can take to improve policy is to decide on a long-term path for the price ...
Working Paper
Recent developments in monetary macroeconomics and U.S. dollar policy
This paper summarizes recent developments in the theory and practice of monetary policy in a closed economy and explains what these developments mean for United States dollar policy. There is no conflict between what is appropriate U.S. monetary policy at home or abroad because the dollar is the world's key currency. Both at home and abroad, the main problem for U.S. policymakers is to provide an anchor for the dollar. Recent experience in other countries suggests that a solution is evolving in the use of inflation targets.
Working Paper
Inflation persistence and flexible prices
If the central bank follows an interest rate rule, then inflation is likely to be persistence, even when prices are fully flexible. Any shock, whether persistent or not, may lead to inflation persistence. In equilibrium, the dynamics of inflation are determined by the evolution of the spread between the real interest rate and the central bank?s target. Inflation persistence in U.S. data can be characterized by a vector autocorrelation function relating inflation and deviations of output from trend. This paper shows that a flexible-price general equilibrium business cycle model with money and ...