Monetary policy trade-offs and the correlation between nominal interest rates and real output

Article Abstract:

A structural model of the U.S. economy is presented in which the price-contracting requirement with a term-structure relationship is combined with an aggregate demand curve and a monetary-policy reaction function. Significant features of postwar data are matched well in the model. The model also provides a structural explanation of real output's correlation with the short-term nominal rate of interest. A series of experiments on monetary policy is done to show a good balance has been attained among competing objectives in monetary policy.

Interest rates

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Money and output: a test of reverse causation

Article Abstract:

The perceived correlation between money and output is not wholly attributable to the endogenous reaction of monetary aggregates to output. This is so because a simultaneous reaction by the monetary authority to all economic data available is not enough to keep pace with the high correlation between output and monetary lags. Furthermore, post-output shock events affect the deposit-currency ratio more than earlier events despite bank production of monetary assets.

Research, Money

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Recent exchange-rate experience and proposals for reform

Article Abstract:

Proposals have been made regarding the stabilization of the foreign currency market. Some economists argue for the development of institutions, such as the Multilateral Intervention Fund and the European exchange rate mechanism. Others propose the imposition of taxes on speculative transactions. On the other hand, others propose the return to fixed exchange rates. These measures are geared towards the removal of the floating exchange rate policy.

Administration of General Economic Programs, Currency Stabilization Programs, Prices and rates, Foreign exchange, Foreign exchange rates, Currency stabilization, Foreign exchange market

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