High-powered money has been declining relative to nominal GDP in the United States. Does the ability of monetary policy to affect aggregate activity decline as the money-income ratio falls? In this paper, I specify simple model economy, examining the effects that monetary policy actions and...

Welcome Remarks at a Federal Reserve Bank of Dallas Conference, Dallas, Texas, October 12, 2007. ; "John Taylor has divided his career between academia and government service, and both spheres owe him a debt of gratitude for having done so."

In this paper, we consider a government that executes a permanent open market sale. The government is forced to eventually use money creation to pay for the debt's expenses, choosing between changing either the money growth rate (the inflation-tax rate) or the reserve requirement ratio (the...