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| Author: | Rudebusc, G. D. Svensson, E. G. |
| Title: | Eurosystem monetary targeting: Lessons from U.S. data |
| Journal: | European Economic Review
2002 : MAR, VOL. 46:3, p. 417-442 |
| Index terms: | MONETARY SYSTEM USA EUROPE EURO |
| Language: | eng |
| Abstract: | Using a small empirical model of inflation, output, and money estimated on U.S. data, the authors compare the relative performance of monetary targeting and inflation targeting. The results show monetary targeting to be quite inefficient, yielding both higher inflation and output variability. This is true even with a nonstochastic money demand formulation. The authors' results are also robust to using a P* model of inflation. Therefore, in these popular frameworks, there is no support for the prominent role given to money growth in the Eurosystem's monetary policy strategy. The paper provides a substantial list of references on this subject. |
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