Simple Rules, Discretion and Monetary Policy / Robert Flood, Peter Isard.

By:

Flood, Robert

Contributor(s):

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2934.Publication details: Cambridge, Mass. National Bureau of Economic Research 1989.Description: 1 online resource: illustrations (black and white)Subject(s):

E - Macroeconomics and Monetary Economics

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Abstract: In this paper we explore the possibilities arising under a policy in which a partially state contingent money-supply rule is mixed with discretion. In addition to demonstrating that such mixed strategies can dominate both complete discretion and rigid adherence to the partially state contingent rule, we investigate the appropriate setting of parameters in a partially state contingent policy when it is acknowledged that the rule will not be followed on all occasions--i.e., that sometimes the monetary authority will resort to discretion.

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Working Paper	Biblioteca Digital	Colección NBER	nber w2934 (Browse shelf(Opens below))	Not For Loan

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April 1989.

In this paper we explore the possibilities arising under a policy in which a partially state contingent money-supply rule is mixed with discretion. In addition to demonstrating that such mixed strategies can dominate both complete discretion and rigid adherence to the partially state contingent rule, we investigate the appropriate setting of parameters in a partially state contingent policy when it is acknowledged that the rule will not be followed on all occasions--i.e., that sometimes the monetary authority will resort to discretion.