NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary Policy Analysis in Models Without Money

Bennett T. McCallum

NBER Working Paper No. 8174
Issued in March 2001
NBER Program(s):   EFG   ME

The following arguments are developed: (i) models without monetary aggregates do not imply that inflation is a non-monetary phenomenon and are not necessarily non-monetary models; (ii) theoretical considerations suggest that such models are misspecified, but the quantitative significance of this misspecification is very small; (iii) some prominent arguments based on indeterminacy' findings are of dubious merit: there are reasons for believing that findings of solution multiplicity are theoretical curiosities that have no real world significance; (iv) monetary policy rules that violate the Taylor principle, by contrast, possess another characteristic the absence of E-stability that suggests undesirable behavior in practice.

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Document Object Identifier (DOI): 10.3386/w8174

Published: McCallum, Bennett T. "Recent Developments In Monetary Policy Analysis: The Roles Of Theory And Evidence," FRB Richmond - Economic Review, 2002, v88(1,Winter), 67-96.

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