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 argument that an interest rate peg is desirable because it mitigates the distortions that arise in a monetary economy, and that money growth should be procyclical in order to achieve the interest rate peg.

What rule should a central bank interested in inflation stability follow? Because monetary policy tends to work with lags, it is tempting to use inflation forecasts to generate policy advice. This article, however, suggests that the use of forecasts to drive policy is potentially destabilizing....

The Modigliani-Miller theorem is fundamental to the theory of corporate finance. One of the theorem's immediate implications is that there is no reason for the monetary authority to respond to asset prices. This article posits a world in which the Modigliani-Miller theorem does not hold. The...

An examination of the commonly accepted positive correlation between money and real output, including a review of several models of business cycles and an explanation of how money can be neutral and yet still appear to affect real output.

An examination of the impact of APR violations, demonstrating that the efficiency of such violations depends on the specific contracting problem with which a firm and its creditors are faced, and that as a result, an optimal bankruptcy institution should allow contract participants to decide ex...

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 discussion of six papers presented at the Federal Reserve Bank of Cleveland's Conference on Price Stability in November 1990, focusing on how recent developments in macroeconomic research have changed perceptions about optimal inflation policy.

An examination of why black Americans' earnings continue to lag whites' and why the problem is especially acute in the southern states. Better understanding of the factors driving regional pay differentials can help explain some of the disparities at the national level and is also applicable to...

The authors use a stylized model of the economy to analyze how permanent and temporary increases in government expenditure--and the timing of taxation used to finance them--affect aggregate output and other variables that describe the economy.