TY  - JOUR
AU  - Bordo,Michael D.
AU  - Choudhri,Ehsan U.
AU  - Schwartz,Anna J.
TI  - Money Stock Targeting, Base Drift and Price-Level Predictability:  Lessons From the U.K. Experience
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2825
PY  - 1991
Y2  - February 1991
UR  - http://www.nber.org/papers/w2825
L1  - http://www.nber.org/papers/w2825.pdf
N1  - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu

Anna J. Schwartz
NBER
365 Fifth Ave, 5th Floor
New York, NY  10016
Tel: 212/817-7957
Fax: 212/817-1597
E-Mail: aschwartz@gc.cuny.edu
AB  - It is controversial whether money stock targeting without base drift (i.e. following a trend-stationary growth path) makes the price level more predictable in the presence of permanent shocks to money demand. Developing a procedure that does not run into the Lucas critique, and applying this procedure to the case of the U.K., the paper finds that the variance of the trend inflation rate in the U.K. would have been reduced by more than one half if the Bank of England had not allowed base drift.
ER  -