Poole Revisited

Harris Dellas (), Fabrice Collard and Guy Ertz

No 2521, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the properties of alternative central bank targeting procedures in a general equilibrium monetary model of the US economy with labour contracts, endogenous velocity and three shocks: money demand, supply and fiscal. Money demand -velocity- shocks emerge as the main sources of macroeconomic volatility. Consequently, nominal interest rate targeting results in greater stability than money targeting. Interestingly this holds independently of the type of the shock (unlike Poole). Interest rate targeting also generates a higher level of welfare.

Keywords: Central bank operating procedures; Money targeting; Interest targeting; Macroeconomic stability; Monetary policy and welfare (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
Date: 2000-08
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Poole Revisited (2011)
Working Paper: Poole Revisited (1998)
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