Price stability is an important goal of public policy. To reach this goal, two key questions must be addressed: How can price stability be achieved? And, how much price stability is desirable? The authors review the fiscal theory of the price level, with special emphasis on its implications for...

A discussion of sticky nominal wages, showing that nominal income or price-level targeting policies result in smaller distortions than do policies that target output or money.

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 description of the little-known rules governing the holding of required clearing balances at the Federal Reserve Banks, a look at the growing popularity of this relatively new phenomenon, and an analysis of its impact on the setting and measuring of monetary policy.

At a time when past rules of thumb seem inadequate, the author briefly reviews the connection between money and prices.

A look at the pros and cons of currency boards as an institution for providing monetary credibility in developing countries.

An argument for an institutional reform to lengthen the reserve- accounting period from one week to four weeks and to stagger the reserve-accounting periods among four groups of banks. Such staggered- reserve accounting would allow the Federal Reserve to set operating targets for total reserves.

An argument that attempting to alleviate the burden of unemployment on the less affluent through expansionary monetary policy may hurt the clientele it is supposed to serve if, ultimately, the policy leads to higher long-run rates of inflation.

Economic theory implies that the quantity of money in the economy is linked both to the Federal Reserve's policy-making instruments and its ultimate objectives and should therefore be useful in formulating policy decisions. The Federal Reserve defines monetary aggregates, composed of financial...