期刊名称：Departmental Discussion Papers / University of Glasgow, Department of Economics
出版年度：2003
卷号：1
出版社：University of Glasgow, Department of Economics
摘要：We provide evidence that Federal Reserve’s money supply can be characterized
by a simple rule, whereby the growth rate of nonborrowed reserves depends on
expected in‡ation. The Volcker-Greenspan era is found to be associated with
a negative in‡ation elasticity, whereas our estimates indicate that the Federal
Reserve in the pre-1980 era supplied money in an accommodating way. While
these results appear to be consistent with empirical evidence on interest rate
rules, our theoretical analysis gives rise to novel insights. Applying a New
Keynesian model, money supply rules are shown to ensure saddle path stability,
indicating that they do not allow for self-ful…lling expectations. Further,
optimal monetary policy can be implemented by a money supply rule with a
negative in‡ation elasticity, implying that the pre-1980 regime was less e¢cient
in dampening macroeconomic ‡uctuations. On the transmission of money supply
shocks, we show that a negative in‡ation elasticity raises the likelihood of
a liquidity e¤ect and lowers the persistence of the output response.
