NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Should The Fed Smooth Interest Rates? The Case of Seasonal Monetary Policy

N. Gregory Mankiw, Jeffrey A. Miron

NBER Working Paper No. 3388 (Also Reprint No. r1646)
Issued in June 1990
NBER Program(s):   EFG   ME   ITI   PE

This paper examines the choice of monetary policy in response to seasonal fluctuations in the economy. It discusses the costs and benefits of smoothing interest rates over the seasons, which has been the Fed's policy since its founding in 1914, and presents simulations suggesting how the economy would behave under the alternative policy of stabilizing the money stock. Finally, it presents evidence that the smoothing of interest rates in 1914 changed the seasonal business cycle.

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Document Object Identifier (DOI): 10.3386/w3388

Published: Carnegie-Rochester Conference Series on Public Policy, Vol. 34, pp. 41-69,(Spring 1991). citation courtesy of

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