Optimal Weights in a Check‐List of Monetary Indicators*

Abstract

A stylized representation of the check‐list approach to monetary policy is developed. In order to examine this approach in a formal framework the literature on optimal money supply rules is extended with the check‐list being interpreted as an optimal money supply rule that depends on many variables and attempts to keep the economy on a preplanned path despite unexpected shocks. The strengths and weaknesses of the check‐list approach are then examined

MetaTaylor Rules for theUKandAustralia; Accommodating Regime Uncertainty in Monetary Policy Analysis Using Model Averaging Methods

“…For Australia, Macfarlane () provides an overview of the evolving nature of monetary policy. It is, perhaps, a simpler chronology than for the UK: 1976q1–1985q1: monetary targeting; 1985q2–1992q4: a checklist approach in which a broad range of variables were used to determine the stance of monetary policy (Stemp, ); 1993q1–today: inflation targeting. …”

“…1976q1-1985q1: monetary targeting; 2. 1985q2-1992q4: a checklist approach in which a broad range of variables were used to determine the stance of monetary policy (Stemp, 1991); 3. 1993q1-today: inflation targeting.…”

The Role of Monetary Policy in Australia: A Minimalist Approach

“…Endnotes 1. A stylised representation of the check-list has been presented in Stemp (1991aStemp ( , 1991b.…”

Monetary Policy in Australia: The Conflict between Short‐Term and Medium‐Term Objectives

“…One interpretation of the indicators (check-list) approach sees monetary policy as an instrument for short-run stabilisation policy (Stemp 1991). Under this interpretation, the monetary authority chooses a long-run pre-planned path for the economy consistent with a choice of monetary policy variable (money supply or interest rate) and uses the indicators approach to minimise the effect of unexpected shocks which tend to drive economic variables away from this preplanned path.…”