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| Author: | Ireland, P. |
| Title: | Interest rates, inflation, and federal reserve policy since 1980 |
| Journal: | Journal of Money, Credit and Banking
2000 : AUG, VOL. 32:3, p. 417-434 |
| Index terms: | INTEREST RATES INFLATION POLICY |
| Language: | eng |
| Abstract: | This paper characterizes Federal Reserve policy since 1980 as one that actively manages short-term nominal interest rates in order to control inflation and evaluates this policy using a dynamic, stochastic, sticky-price model of the United States economy. The results show that the Fed's policy insulates aggregate output from the effects of exogenous demand-side disturbances and, by calling for a modest but persistent reduction in short-term interest rates following a positive technology shock, helps the economy to respond to supply-side disturbances as it would in the absence of nominal rigidities. |
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