A traditional function of the central bank is to control the price level. The fiscal theory of the price level challenges this assumption, arguing instead that the fiscal authority's budgetary policy is the primary determinant of the price level. The authors provide a critical review of the...

An examination of recent empirical research on money demand, which states that the interest elasticity of money demand is greater than most economists previously thought. The author discusses the policy implications of this research for both the M1 and M2 measures.

An analysis of how federal funds futures markets are efficient processors of information concerning the future path of the fed funds rate and a discussion of some related implications for central-bank policymaking.

Price stability is an important goal of public policy. To reach this goal, two key questions must be addressed: How can price stability be achieved? And, how much price stability is desirable? The authors review the fiscal theory of the price level, with special emphasis on its implications for...

A discussion of sticky nominal wages, showing that nominal income or price-level targeting policies result in smaller distortions than do policies that target output or money.

A summary of the fifth in a series of symposiums sponsored by the Federal Reserve Bank of Cleveland. The September 1994 meeting was dedicated to monetary policy issues and included examinations of the macroeconomic effects of price rigidity and sluggish savings decisions by households, the...

A description of the little-known rules governing the holding of required clearing balances at the Federal Reserve Banks, a look at the growing popularity of this relatively new phenomenon, and an analysis of its impact on the setting and measuring of monetary policy.

A look at the pros and cons of currency boards as an institution for providing monetary credibility in developing countries.

An argument that attempting to alleviate the burden of unemployment on the less affluent through expansionary monetary policy may hurt the clientele it is supposed to serve if, ultimately, the policy leads to higher long-run rates of inflation.

Monetary policy was freed from the straightjacket of pegging U.S. Treasury interest rates following the Treasury-Federal Reserve Accord in 1951. This newfound freedom led to a growing debate inside and outside the Federal Reserve System about the appropriate measures to use as operating guides....