01749cam a22002417 4500001000600000003000500006005001700011008004100028100002000069245008100089260006600170490004100236500001600277520078900293530006101082538007201143538003601215690006501251710004201316830007601358856003701434856003601471w5952NBER20150504103001.0150504s1997 mau||||fs|||| 000 0 eng d1 aBall, Laurence.10aEfficient Rules for Monetary Policyh[electronic resource] /cLaurence Ball. aCambridge, Mass.bNational Bureau of Economic Researchc1997.1 aNBER working paper seriesvno. w5952 aMarch 1997.3 aThis paper defines an efficient rule for monetary policy as one that minimizes a weighted sum of output variance and inflation variance. It derives several results about the efficiency of alternative rules in a simple macroeconomic model. First, efficient rules can be expressed as 'Taylor rules' in which interest rates respond to output and inflation. But the coefficients in efficient Taylor rules differ from the coefficients that fit actual policy in the United States. Second, inflation targets are efficient. Indeed, the set of efficient rules is equivalent to the set of inflation-target policies with different speeds of adjustment. Finally, nominal-income targets are not merely inefficient, but disastrous: they imply that output and inflation have infinite variances. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aE52 - Monetary Policy2Journal of Economic Literature class.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w5952.4 uhttp://www.nber.org/papers/w595241uhttp://dx.doi.org/10.3386/w5952