A comparison of some basic monetary policy regimes for open economies: implications of different degrees of instrument adjustment and wage persistence

Dale Henderson and Warwick McKibbin

No 458, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Monetary policy regime combinations are compared for symmetric and asymmetric temporary shocks to money demand, goods demand, and productivity. In every region, the interest-rate instrument is either kept constant or changed to eliminate (full instrument adjustment) or reduce (partial instrument adjustment) the gap between actual and desired values for an intermediate target: the money supply, nominal income, or output plus inflation. Nominal wage persistence may be absent (Contract hypothesis) or present (Phillips hypothesis and Taylor hypothesis). There are analytical and simulation results from a two-region workhorse model and simulation results from the McKibbin-Sachs Global model. The ranking of regime combinations depends not only on the ultimate target and the source of shocks but also on the degrees of instrument adjustment and wage persistence.

Keywords: Econometrics; Monetary policy (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
http://www.federalreserve.gov/pubs/ifdp/1993/458/default.htm (text/html)
http://www.federalreserve.gov/pubs/ifdp/1993/458/ifdp458.pdf (application/pdf)

Related works:
Journal Article: A comparison of some basic monetary policy regimes for open economies: implications of different degrees of instrument adjustment and wage persistence (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:458

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier (ryan.d.wolfslayer@frb.gov).