NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Issues in the Design of Monetary Policy Rules

Bennett T. McCallum

NBER Working Paper No. 6016
Issued in April 1997
NBER Program(s):   EFG   ME

Topics covered in this survey paper include the following: distinguishing rules from discretion in practice; the feasibility of rule-like behavior by an independent central bank; optimal control vs. robustness as research strategies; choice among target variables; growth-rate vs. growing-level target paths; feasibility of interest rate and monetary base instruments; nominal indeterminacy as distinct from solution multiplicity; root-mean-square performance measures with interest rate and monetary base instruments; operationality of rule specifications; stochastic vs. counterfactual historical simulation procedures; interactions between monetary and fiscal policies; and the fiscal theory of the price level.

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Published:

  • McCallum, Bennett T., 1999. "Issues in the design of monetary policy rules," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 23, pages 1483-1530 Elsevier. ,
  • McCallum, Bennett T. "Recent Developments In The Analysis Of Monetary Policy Rules," FRB Saint Louis - Review, 1999, v81(6,Nov/Dec), 3-11.

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