EconPapers    
Economics at your fingertips  
 

The new neoclassical synthesis and the role of monetary policy

Marvin Goodfriend and Robert King ()

No 98-05, Working Paper from Federal Reserve Bank of Richmond

Abstract: Macroeconomics is moving toward a New Neoclassical Synthesis, which like the synthesis of the 1960s melds Classical with Keynesian ideas. This paper describes the key features of the new synthesis and its implications for the role of monetary policy. We find that the New Neoclassical Synthesis rationalizes an activist monetary policy which is a simple system of inflation targets. Under this \"neutral\" monetary policy, real quantities evolve as suggested in the literature on real business cycles. Going beyond broad principles, we use the new synthesis to address several operational aspects of inflation targeting. These include its practicality, the response to oil shocks, the choice of price index, the design of a mandate, and the tactics of interest rate policy.

Keywords: Monetary theory; Macroeconomics; Inflation (Finance) (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (254) Track citations by RSS feed

Downloads: (external link)
http://www.richmondfed.org/publications/research/working_papers/1998/wp_98-5.cfm (text/html)
http://www.richmondfed.org/publications/research/w ... /1998/pdf/wp98-5.pdf (application/pdf)

Related works:
Chapter: The New Neoclassical Synthesis and the Role of Monetary Policy (1997) Downloads
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:fedrwp:98-05

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-04-12
Handle: RePEc:fip:fedrwp:98-05