TY  - JOUR
AU  - Cecchetti,Stephen G.
AU  - Flores-Lagunes,Alfonso
AU  - Krause,Stefan
TI  - Has Monetary Policy Become More Efficient?  A Cross Country Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10973
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10973
L1  - http://www.nber.org/papers/w10973.pdf
N1  - Author contact info:
Stephen G. Cecchetti
Monetary and Economic Department
Bank for International Settlements
Centralbahnplatz 2
4002 Basel
SWITZERLAND
Tel: +41 61 280 8350
Fax: +41 61 280 9113
E-Mail: stephen.cecchetti@bis.org

Alfonso Flores-Lagunes
Binghamton University 
E-Mail: aflores@binghamton.edu

Stefan Krause
E-Mail: stefan.krause@banque-france.fr
AB  - Over the past twenty years, macroeconomic performance has improved in industrialized and developing countries alike. In a broad cross-section of countries inflation volatility has fallen markedly while output variability has either fallen or risen only slightly. This increased stability can be attributed to either: 1) more efficient policy-making by the monetary authority, 2) a reduction in the variability of the aggregate supply shocks, or 3) changes in the structure of the economy. In this paper we develop a method for measuring changes in performance, and allocate the source of performance changes to these two factors. Our technique involves estimating movements toward an inflation and output variability efficiency frontier, and shifts in the frontier itself. We study the change from the 1980s to the 1990s in the macroeconomic performance of 24 countries and find that, for most of the analyzed countries, more efficient policy has been the driving force behind improved macroeconomic performance.
ER  -