Optimal Control of the Money Supply
Robert B. Litterman
NBER Working Paper No. 912
Using optimal control theory and a vector autoregressive representation of the relationship between money and interest rates, one can derive a feedback control procedure which defines the best possible tradeoff between interest rate volatility and money supply fluctuations and which could be used to reduce both from their current levels.
Document Object Identifier (DOI): 10.3386/w0912
Published: Quarterly Review, Federal Reserve Bank of Minneapolis, Fall 1982, 6(3): 1-9. citation courtesy of
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