Estimating the welfare gains from ending inflation requires taking a stand on the shape of the money demand function. A form of the money demand function that seems to describe U.S. experience - known in technical jargon as the double log form - seems to work well in countries and times where...

In this article, James B. Bullard and Alvin L. Marty begin by summarizing some popular arguments for positive steady-state rates of inflation based on the idea that a certain amount of inflation stabilizes economic performance. Then, synthesizing a number of disparate results in a single...

A model is presented to determine the effect on the slope of the LM schedule of full deregulation of bank's interest rates on demand deposits. The opportunity costs of holding a bank deposits is analyzed and explicit consideration is given to the marginal costs of intermediation. Two popular...

Early in 2000, Ecuador, confronted with a serious economic crisis, adopted the US dollar as its national currency, This book examines the conditions that led to this action, describing the repeated cycles of crisis and failed stabilization that fatally undermined confidence in the Ecuadorian...

The author describes a spread-sheet planning model to help determine the government deficit consistent with a policymaker's "vector" of principal macroeconomic objectives (including real GDP growth, inflation, exchange rate, and international reserve accumulation). The model focuses on the...

Over the 1980s and 1990s, GDP growth had stagnated because of oil export price volatility and natural disasters, the sacrifice of capital formation to heavy external public debt service, and incomplete and uneven structural reform. The exchange rate depreciation that proved continually necessary...