Timeless perspective vs. discretionary monetary policy in forward-looking models

Bennett McCallum and Edward Nelson

Review, 2004, vol. 86, issue Mar, 43-56

Abstract: This paper reviews the distinction between the timeless perspective and discretionary modes of monetary policymaking, the former representing rule-based policy as formalized by Woodford (1999). In models with forward-looking expectations, this distinction is important because discretionary policymaking> produces a second inefficiency distinct from the familiar inflationary bias. The authors present calculations of the quantitative magnitude of this second inefficiency and find in all of the cases examined that the unconditional average performance of timeless perspective policymaking is at least as good as that provided by optimal discretionary behavior.

Keywords: Monetary; policy (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (136)

Downloads: (external link)
https://files.stlouisfed.org/files/htdocs/publications/review/04/03/McCallum.pdf (application/pdf)

Related works:
Working Paper: Timeless Perspective Vs Discretionary Monetary Policy in Forward-Looking Models (2001)
Working Paper: Timeless Perspectives vs. Discretionary Monetary Policy In Forward-Looking Models (2000)
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:fedlrv:y:2004:i:mar:p:43-56:n:v.86no.2

Access Statistics for this article

Review is currently edited by Juan M. Sanchez

More articles in Review from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().