Interest on Reserves and Monetary Policy

Monetary policy operating procedures have long beendebated within the Federal Reserve and amongmonetary economists at large. For instance, economists havedisagreed about whether a central bank should utilize bankreserves or the interest rate as the policy instrument. For thetime being at least, the Fed has settled on an interest rate policyinstrument and has announced its current federal funds ratetarget since 1994. The focus on interest rate policy is reflectedin the ubiquitous use of the Taylor rule in monetary policyanalysis...