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Is the Fiscal Theory of the Price Level Learnable?

McCallum, Bennett T. - 2003

This paper presents a prototype model for development of the fiscal theory of the price level.' In this simple setting, the fiscal theory's distinctiveness relies upon adoption of a bubble solution, rather than the rational-expectations fundamentals solution. The paper then shows that the fiscal...

Persistent link: https://www.econbiz.de/10012468736

Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination

McCallum, Bennett T. - 1998

The recently-developed fiscal theory of price level determination contends that there is an important class of policy rules in which there exists a unique rational expectations solution that shows the price level to be dependent upon fiscal policy and independent of monetary variables. The...

Persistent link: https://www.econbiz.de/10012472349

Recent Developments in Monetary Policy Analysis : The Roles of Theory and Evidence

McCallum, Bennett T. - 1999

Both academic thinking about monetary economics and the practice of monetary policy have changed dramatically since 1971-1973, when the rational expectations revolution was beginning and the Bretton Woods system was crumbling. The present paper considers whether the various changes that have...

Persistent link: https://www.econbiz.de/10012471709

The Liquidity Trap and the Pigou Effect : A Dynamic Analysis with Rational Expectations

McCallum, Bennett T. - 1982

economy may lack--despite price flexibility--automatic market mechanisms that tend to eliminate excess supplies of labor. The …") of an economy that has been shocked away from full employment. The present paper develops a dynamic analysis, in a rather …'s suggestion that, because of expectational effects, such an economy could be unstable. Also considered is Martin J. Bailey …

Persistent link: https://www.econbiz.de/10012478214

Money Stock Control with Reserve and Interest Rate Instruments Under Rational Expectations

McCallum, Bennett T. - 1982

This paper conducts a theoretical comparison of the potential effectiveness, in terms of money stock controllability, of interest rate and reserve instruments. Whereas previous studies have been basically static, the present analysis is carried out in the context of a dynamic macroeconomic model...

Persistent link: https://www.econbiz.de/10012478215

Price Level Determinacy with an Interest Rate Policy Rule and Rational Expectations

McCallum, Bennett T. - 1980

This paper reconsiders a result obtained by Sargent and Wallace, namely, that price level indeterminacy obtains in their well-known model if the monetary authorities adopt a policy feedback rule for the interest rate rather than the money stock. Since the Federal Reserve seems often to have used...

Persistent link: https://www.econbiz.de/10012478574

Determinacy, Learnability, and Plausibility in Monetary Policy Analysis : Additional Results

McCallum, Bennett T. - 2008

In a very broad class of dynamic linear models, if agents possess knowledge of current endogenous variables in a least-squares learning process, determinacy of a rational expectations (RE) equilibrium is sufficient but not necessary for learnability of that equilibrium. Thus, since learnability...

Persistent link: https://www.econbiz.de/10012464483

A Monetary Policy Rule for Automatic Prevention of a Liquidity Trap

McCallum, Bennett T. - 2005

effectiveness even if the economy is temporarily shocked into a ZLB situation … are studied within a small open economy model developed by McCallum and Nelson. Results indicate that under ZLB conditions …

Persistent link: https://www.econbiz.de/10012467631

Multiple-Solution Indeterminacies in Monetary Policy Analysis

McCallum, Bennett T. - 2003

This paper discusses four current topics in monetary policy analysis, each of which hinges on the possibility of multiple solutions in rational expectations (RE) models. In three of these cases--involving inflation forecast targeting, the zero-lower bound deflation trap, and the fiscal theory of...

Persistent link: https://www.econbiz.de/10012468861

Determinacy, Learnability, Plausibility, and the Role of Money in New Keynesian Models

McCallum, Bennett T. - 2012

Recent mainstream monetary policy analysis focuses on rational expectation solutions that are uniquely stable. A number of recent studies have examined the question of whether typical New Keynesian (NK) models, with policy rules that satisfy the Taylor principle, also exhibit solutions with...

Persistent link: https://www.econbiz.de/10012460445