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Money and the transmission mechanism in the optimizing IS-LM specification

Nelson, Edward - Federal Reserve Bank of St. Louis - 2003

recognition to the intertemporal nature of households' saving decisions. Like traditional IS-LM, however, the optimizing version … tends to understate the value of money as an indicator for monetary policy. …

Persistent link: https://www.econbiz.de/10005707651

Tobin's imperfect asset substitution in optimizing general equilibrium

Andres, Javier; López-Salido, J. David; Nelson, Edward - Federal Reserve Bank of St. Louis - 2004

In this paper, we present a dynamic optimizing model that allows explicitly for imperfect substitutability between different financial assets. This is specified in a manner which captures Tobin's (1969) view that an expansion of one asset's supply affects both the yield on that asset and the...

Persistent link: https://www.econbiz.de/10005352930

Why money growth determines inflation in the long run: answering the Woodford critique

Nelson, Edward - Federal Reserve Bank of St. Louis - 2008

determined by steady-state money growth. Woodford instead argues that the intercept term in the monetary authority's interest …, according to which it is appropriate to regard steady-state inflation as determined by steady-state money growth. The argument … the money growth rate. …

Persistent link: https://www.econbiz.de/10005352999

International evidence on the stability of the optimizing IS equation

Kara, Amit; Nelson, Edward - Federal Reserve Bank of St. Louis - 2004

In this paper we provide international evidence on the issue of whether the optimizing IS equation is more stable than a backward-looking alternative. The international evidence consist of estimates of IS equations on quarterly data for the UK and Australia, both for the full sample of the last...

Persistent link: https://www.econbiz.de/10005707758

Using extraneous information to analyze monetary policy in transition economies

Gavin, William T.; Kemme, David M. - Federal Reserve Bank of St. Louis - 2007

Empirical work in macroeconomics is plagued by small sample size and large idiosyncratic variation. This problem is especially severe in the case of transition economies. We use a mixed estimation method incorporating information from OECD country data to estimate the parameters of a...

Persistent link: https://www.econbiz.de/10005490941

Macroeconometric equivalence, microeconomic dissonance, and the design of monetary policy

Levin, Andrew T.; López-Salido, J. David; Nelson, Edward; … - Federal Reserve Bank of St. Louis - 2008

Many recent studies in macroeconomics have focused on the estimation of DSGE models using a system of loglinear approximations to the models' nonlinear equilibrium conditions. The term macroeconometric equivalence encapsulates the idea that estimates using aggregate data based on first-order...

Persistent link: https://www.econbiz.de/10005490955

Monetary and fiscal theories of the price level: the irreconcilable differences

McCallum, Bennett T.; Nelson, Edward - Federal Reserve Bank of St. Louis - 2006

bonds and differ drastically from those of money supplies. We argue that the FTPL attained prominence precisely because it …

Persistent link: https://www.econbiz.de/10005360634

Money and the natural rate of interest: structural estimates for the United States and the Euro area

Andrés, Javier; López-Salido, J. David; Nelson, Edward - Federal Reserve Bank of St. Louis - 2007

We examine the role of money, allowing for three competing environments: the New Keynesian model with separable utility … and static money demand; a non-separable utility variant with habit formation; and a version with adjustment costs for … holding real balances. The last two variants imply forward-looking behavior of real money balances, as it is optimal for …

Persistent link: https://www.econbiz.de/10005352963

Monetary policy neglect and the Great Inflation in Canada, Australia, and New Zealand

Nelson, Edward - Federal Reserve Bank of St. Louis - 2004

This paper studies the Great Inflation in Canada, Australia, and New Zealand. Newspaper coverage and policymakers' statements are used to analyze the views on the inflation process that led to the 1970s macroeconomic policies, and the different movement in each country away from 1970s views. I...

Persistent link: https://www.econbiz.de/10005360570

Targeting vs. instrument rules for monetary policy

McCallum, Bennett T.; Nelson, Edward - Federal Reserve Bank of St. Louis - 2004

Svensson (2003) argues strongly that specific targeting rules*first order optimality conditions for a specific objective function and model*are normatively superior to instrument rules for the conduct of monetary policy. That argument is based largely upon four main objections to the latter plus...

Persistent link: https://www.econbiz.de/10005352773