This talk emphasizes the connection between inflation targeting and monetary policy rules. Inflation targeting is not enough. You need to have a policy procedure - a policy rule - to achieve the target. And one cannot design or evaluate a monetary policy rule without a target inflation rate....

The paper derives the monetary policy reaction function implied by money growth targeting. It consists of an interest rate response to deviations of the inflation rate from target, to the change in the output gap, to money demand shocks and to the lagged interest rate. We show that this type of...

This paper compares the properties of interest rate rules such as simple Taylor rules and rules that respond to price-level fluctuations - called Wicksellian rules - in a basic forward-looking model. By introducing appropriate history dependence in policy, Wicksellian rules perform better than...

It is well known that the Fed can operate the optimal monetary policy if the Fed is able to trace the Natural-Rate-of-Interest (NRI) successfully. In this sense, it has been wondered if there could be a certain way practically available for the Fed to get it done. It is shown that, based on NRI...