Forecast targeting is an innovation in central banking that represents an important step toward more rule-based policymaking, even if it is not an attempt to follow a policy rule of any of the types that have received primary attention in the theoretical literature on optimal monetary policy....

We extend the basic (representative-household) New Keynesian [NK] model of the monetary transmission mechanism to allow for a spread between the interest rate available to savers and borrowers, that can vary for either exogenous or endogenous reasons. We find that the mere existence of a...

We consider the desirability of modifying a standard Taylor rule for a central bank's interest-rate policy to incorporate either an adjustment for changes in interest-rate spreads (as proposed by Taylor [2008] and by McCulley and Toloui [2008]) or a response to variations in the aggregate volume...

This paper proposes a general method for deriving an optimal monetary policy rule in the case of a dynamic linear rational-expectations model and a quadratic objective function for policy. A commitment to a rule of the type proposed results in a determinate equilibrium in which the responses to...

This paper uses data for nineteen industrial countries over the period 1960-1985 to examine the evidence for international convergence of technical progress. Several models of convergence, including a model in which convergence is affected by changes in a country's openness to trade, are...

The paper first assesses regional and ethnic group differences in social trust and memberships in both Canada and the United States. The ethnic categories people choose to describe themselves are as important as regional differences, but much less important than education, in explaining...