Perspectives on U.S. Monetary Policy Tools and Instruments

Abstract

for helpful suggestions. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Economic Policy - The Forth Dimension of the Economic Theory

“…Such "corrections" of the current economic and financial legislation are known as economic policy, monetary policy, fiscal policy and etc. Change, disruption, improvements of the economic legislation takes form of various policy tools and actions (Douglas, 1946;Blanchard, 1980;Benigno et.al., 2012;Blinder, 2019;Hamilton, 2019;Dou et.al., 2020;Blinder, 2021;Bianchi et.al., 2022).…”

“…The core of the economic policy that probably attracts most attention composed by the monetary and tax policy. Economic policy and its most distinguished branch -monetary policy, studied by (Douglas, 1946;Fabricant, 1961;Blanchard, 1980;Mussa, Volcker and Tobin, 1994;Williams, 2003;Hamilton, 2019;Bianchi, Lettau and Ludvigson, 2022). Interaction of monetary policy and fiscal regulation (Blinder, 2021) underlines the role of Central Banks (Goodhart, 2010;Kim and Mehrotra, 2019).…”

Monetary policy impact on the informal economy and response to shocks in the formal economy

“…In recent years, monetary policy has been seen as a veritable instrument that can be employed to regulate economic activities through the money supply and interest rate (Edeme, Erobu, & Aduku, 2019). Apart from these instruments, other strategies that can be adopted by the Central Bank include the discount rate, reserve requirements, discount rates, open market operations and moral suasion (Hamilton, 2019). These policies when in place are made manifest in economic activities through monetary policy transmission (sometimes referred to monetary policy transmission mechanism).…”

Federal Reserve Balance-Sheet Policy in an Ample Reserves Framework: An Inventory Approach

“…Richer equilibrium approaches to the federal funds market can be found inHamilton (2020),Afonso, Armenter, and Lester (2019),Bianchi andBigio (2022), andLagos andNavarro (2023).…”