In the classical macroeconomic models constructed by Lucas (1972, 1975) and Barro (1976), monetary aggregates are assumed to be generated by a logarithmic random walk. This specification implies that all monetary growth is (a) unanticipated and (b) permanent

Money markets offer monetary services and short-term finance in the capital market with the credit support of institutional sponsors. Investors finance money market instruments at low interest because their salability on short notice confers an implicit monetary services yield. Low interest...

Monetary theory and policy have been revolutionized in the two decades since October 1979, when the Federal Reserve under the leadership of Paul Volcker moved to stabilize inflation and bring it down. On the side of practice, the decisive factor was the demonstration that monetary policy could...