In this paper we examine the effectiveness in controlling long-run inflation of feedback rules for monetary policy that link changes in a short-term interest rate to an intermediate target for either nominal GDP or M2. We conclude that a rule aimed at controlling the growth rate of nominal GDP...

In recent years, the Federal Reserve has become more explicit in stating a goal of gradually reducing inflation to near zero rtes. An important consideration in seeking lower inflation is the transition cost (lost output and employment) incurred in the process. In this paper we ask whether the...

Given doubts about the reliability of the monetary aggregates as intermediate targets of monetary policy, the Federal Reserve attempts to meet its dual goals--gradual reduction of inflation and mitigation of cyclical downturns in output--through purely discretionary adjustments of an interest...