TY  - JOUR
AU  - Clarida,Richard
AU  - Gali,Jordi
AU  - Gertler,Mark
TI  - The Science of Monetary Policy:  A New Keynesian Perspective
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7147
PY  - 1999
Y2  - May 1999
UR  - http://www.nber.org/papers/w7147
L1  - http://www.nber.org/papers/w7147.pdf
N1  - Author contact info:
Richard H. Clarida
Columbia University
420 West 118th Street
Room 1111, IAB
New York, NY  10027
Tel: 212/854-3676
Fax: 212/854-8059
E-Mail: rhc2@columbia.edu

Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat

Mark Gertler
Department of Economics
New York University
269 Mercer Street, 7th Floor
New York, NY 10003
Tel: 212/998-8931
Fax: 212/995-4186
E-Mail: mark.gertler@nyu.edu
AB  - This paper reviews the recent literature on monetary policy rules.  We exploit the monetary policy design problem within a simple baseline theoretical framework.  We then consider the implications of adding various real world complications.  Among other things, we show that the optimal policy implicitly incorporates inflation targeting.  We also characterize the gains from making a credible commitment to fight inflation.  In contrast to conventional wisdom, we show that gains from commitment may emerge even if the central bank is not trying to inadvisedly push output above its natural level.  We also consider the implications of frictions such as imperfect information.
ER  -