Rules versus discretion at the Federal Reserve System: On to the second century

Friedman, Benjamin M.

doi:10.1016/j.jmacro.2012.05.009

“…Kydland and Prescott, 1977). Actually, not much on this debate per se has been done save some studies documenting empirically the alleged tradeoff between rules and discretion, and other work examining theoretically the various aspects of it, by Friedman (2012), Taylor (2012), Amador et al (2006), Albanesi et al (2003), Canzoneri (1985), and Goldfeld (1982) among others. Lately, authors like Carluccio and Menegatti (2012), Arestis and Mihailov (2009), and Athey et al (2005), appear to leave some room for limited compromise, but nowhere is to be found a discussion about complementarity from the viewpoint of having a monetary policy rule becoming operational just because it is accompanied by a fiscal policy feedback rule in a dynamic system.…”

Section: Introductionmentioning

confidence: 99%

Monetary rules and fiscal feedback rules

Soldatos

¹

,

Varelas

²

2015

Cuadernos de Economía

0

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Based on a Cobb-Douglas social welfare function in terms of the utilities of two concurrent generations, this paper derives a Pareto-efficient, envy-free, and equitable interest rate rule supported by a nonlinear-tax feedback rule in case of steady-state disturbance. The young are taxed to subsidize the elderly, expecting the same treatment when the young become old; hence, fiscal policy matters as much as the monetary policy does with regard to the ''same''. The emphasis on monetary policy lies rather in the fact that once the equilibrium status quo of a policy accommodative of a given tax subsidy-cum-interest rate scheme is disturbed, the ''interest-rate part'' will continue being a sensible policy choice only by manipulating the ''tax-subsidy part''. From the political economy view of tax nonlinearity, the tax policy under instability is expected to be both a self-confirming and a perfect insight majority rule equilibrium.

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“…Kydland and Prescott, 1977). Actually, not much on this debate per se has been done save some studies documenting empirically the alleged tradeoff between rules and discretion, and other work examining theoretically the various aspects of it, by Friedman (2012), Taylor (2012), Amador et al (2006), Albanesi et al (2003), Canzoneri (1985), and Goldfeld (1982) among others. Lately, authors like Carluccio and Menegatti (2012), Arestis and Mihailov (2009), and Athey et al (2005), appear to leave some room for limited compromise, but nowhere is to be found a discussion about complementarity from the viewpoint of having a monetary policy rule becoming operational just because it is accompanied by a fiscal policy feedback rule in a dynamic system.…”

Section: Introductionmentioning

confidence: 99%

Monetary Rules and Fiscal Feedback Rules

Soldatos,

Varelas

2014

SSRN Journal

0

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Based on a Cobb-Douglas social welfare function in terms of the utilities of two concurrent generations, this paper derives a Pareto-efficient, envy-free, and equitable interest rate rule supported by a nonlinear-tax feedback rule in case of steady-state disturbance. The young are taxed to subsidize the elderly, expecting the same treatment when the young become old; hence, fiscal policy matters as much as the monetary policy does with regard to the ''same''. The emphasis on monetary policy lies rather in the fact that once the equilibrium status quo of a policy accommodative of a given tax subsidy-cum-interest rate scheme is disturbed, the ''interest-rate part'' will continue being a sensible policy choice only by manipulating the ''tax-subsidy part''. From the political economy view of tax nonlinearity, the tax policy under instability is expected to be both a self-confirming and a perfect insight majority rule equilibrium.

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Küresel Krizi İzleyen Dönemde Para Politikası ve Varlık Fiyatları: Türkiye Örneği

Bulut¹

2017

Eskişehir Osmangazi Üniversitesi İktisadi Ve İdari Bilimler Dergisi

4

0

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Günümüzde pek çok merkez bankası kısa vadeli/gecelik faiz oranlarını kontrol etmeyi ve böylece enflasyona ve çıktıya istikrar kazandırmayı amaçlamaktadır. Söz konusu merkez bankaları kısa vadeli faiz oranlarını kontrol ederek uzun vadeli kredi, mevduat ve devlet tahvili faiz oranlarını etkilemeye çalışmaktadır. Bu çerçevede, bir merkez bankasının tepki fonksiyonu, merkez bankasının ekonomideki gelişmeler karşısında kısa vadeli faiz oranlarını nasıl ayarladığını göstermektedir (

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Rules versus discretion at the Federal Reserve System: On to the second century

Cited by 4 publications

References 13 publications

Monetary rules and fiscal feedback rules

Monetary rules and fiscal feedback rules

Monetary Rules and Fiscal Feedback Rules

Küresel Krizi İzleyen Dönemde Para Politikası ve Varlık Fiyatları: Türkiye Örneği

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