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Monetary policy: why money matters, and interest rates don’t

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2012

rate. Money’s role in monetary policy has been tertiary, at best. Indeed, several influential economists have suggested … that money is irrelevant for monetary policy. They suggest that central banks can control inflation by (i) controlling a … rate in order to exert greater control over longer-term rates. I offer an alternative perspective: namely, that money is …

Persistent link: https://www.econbiz.de/10010558739

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

The efficient market hypothesis and identification in structural VARs

Sarno, Lucio; Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2003

Structural vector autoregression (SVAR) models are commonly used to investigate the effect of structural shocks on economic variables. The identifying restrictions imposed in many of these exercises have been criticized in the literature. This paper extends this literature by showing that if the...

Persistent link: https://www.econbiz.de/10005360546

Controlling inflation after Bretton Woods: an analysis based on policy objectives

Gavin, William T. - Federal Reserve Bank of St. Louis - 2000

This paper reviews the inflation experience in the post-Bretton Woods era in the context of alternative central bankobjectives. It summarizes research on inflation-targeting issues, especially those associated with stabilizing the price level. Generally, inflation-targeting schemes do not...

Persistent link: https://www.econbiz.de/10005490896

Inflation risk and optimal monetary policy

Gavin, William T.; Keen, Benjamin D.; Pakko, Michael R. - Federal Reserve Bank of St. Louis - 2007

This paper shows that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk. We calculate the term structure of inflation uncertainty in New Keynesian models when the monetary authority adopts the optimal policy. When the monetary policy...

Persistent link: https://www.econbiz.de/10005490907

Monetary policy transparency: transparent about what?

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2003

This paper puts the issue of monetary policy transparency into a broad economic perspective. In so doing, it narrows the focus from that which frequently appears in this literature. The analysis is predicated on the assertion that the sole economic argument for transparency is policy...

Persistent link: https://www.econbiz.de/10005490910

Inflation-targeting, price-path targeting and indeterminacy

Dittmar, Robert; Gavin, William T. - Federal Reserve Bank of St. Louis - 2004

In this paper, we examine the areas of indeterminacy in a flexible price RBC model with shopping time role for money …

Persistent link: https://www.econbiz.de/10005490959

Recent developments in monetary macroeconomics and U.S. dollar policy

Gavin, William T. - Federal Reserve Bank of St. Louis - 2005

This paper summarizes recent developments in the theory and practice of monetary policy in a closed economy and explains what these developments mean for United States dollar policy. There is no conflict between what is appropriate U.S. monetary policy at home or abroad because the dollar is the...

Persistent link: https://www.econbiz.de/10005490999

The stimulative effect of forward guidance

Gavin, William T.; Keen, Benjamin D.; Richter, Alexander; … - Federal Reserve Bank of St. Louis - 2013

This paper examines the stimulative effect of central bank forward guidance—the promise to keep future policy rates lower than its policy rule suggests—when the short-term nominal interest rate is stuck at its zero lower bound (ZLB).We utilize a standard New Keynesian model in which forward...

Persistent link: https://www.econbiz.de/10011027342

The identification of the response of interest rates to monetary policy actions using market-based measures of monetary policy shocks

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2009

It is common practice to estimate the response of asset prices to monetary policy actions using market-based measures of monetary policy shocks, such as the federal funds futures rate. I show that because interest rates and market-based measures of monetary policy shocks respond simultaneously...

Persistent link: https://www.econbiz.de/10005077869