Comments on a monetarist approach to demand management

Monetary policy ; Macroeconomics

A comparative static analysis of some monetarist propositions

Monetary policy ; Fiscal policy

Views on deficits and interest rates

Interest rates ; Budget deficits

Editor's introduction

Monetary policy

A review of empirical studies of the money supply mechanism

Money supply

Monetary aggregates, monetary policy and economic activity

Monetary policy ; Velocity of money

Identification of dynamic economic models from reduced form VECM structures: an application of covariance restrictions

This analysis is a straightforward implementation of both long-run and short-run identifying or overidentifying restrictions on a vector error correction model in the "structural VAR" framework. The framework utilizes covariance restrictions, long-run multiplier restrictions, error correction coefficient restrictions, and restrictions on slope coefficients of the stimultaneous interactions in the "economic model." The framework is general enough to incorporate restrictions on impact multipliers. Two examples are provided. The first example is a dynamic M2 demand specification with a comparison to previous results that are constructed using restrictions on distributed lag coefficients to achieve identification. The second example illustrates the identification of equilibrium short-term and long-term interest responses of money demand using error-correction coefficient restrictions when the individual coefficients are underidentified in the cointegrating vectors in the presence of stationary interest rate spreads.Econometric models ; Demand for money

Interest rate volatility and alternative monetary control procedure

Monetary policy - United States ; Interest rates ; Federal Open Market Committee

Flation

“Flation” is an article adapted from a speech of the same title presented before the International Mass Retail Association Leadership Forum, Scottsdale, Arizona, January 21, 2002.Monetary policy ; Inflation (Finance) ; Deflation (Finance)

Perfecting the market's knowledge of monetary policy

The rational expectations revolution made clear that a complete macro model requires a specification of the government's economic policy. We argue that monetary policy should be conducted in such a way that the market can predict policy actions. An implication of market success in predicting policy actions is that interest rates move ahead of the policy actions, and such a timing relationship may appear to some as the central bank following the market instead of leading it. Another implication of the market predicting policy actions is that nominal interest rate changes provide no useful information to the central bank about the strength of aggregate demand or inflationary expectations. Finally, the failure of the market to predict policy actions reflects a problem that needs to be addressed. We explore the theoretical implications of a monetary policy that is completely specified and perfectly understood by the market. We construct a bare-bones model to illustrate the key concepts. Finally, we conduct an empirical investigation of these issues, especially in the context of monetary policy since 1988 when the establishment of the federal funds future market made available well-defined market information on expectations about Fed policy actions.Monetary policy ; Federal funds rate