Contribution to the panel session at the Hoover Institution conference on “Frameworks for Monetary Policy for the Next Century,” May 30, 2014.

This paper draws on several actual policy experiences of the author to demonstrate why it is important to have a rules-based monetary policy. These experiences show that policy rules provide a needed “steady as you go” strategy and serve as an insurance against excessive intervention. They...

President Charles Plosser discusses his views on the benefits of a systematic and rule-like approach to monetary policy.

Hundred percent reserve transaction banking system is proposed with tax-free interest on demand deposits and interest bearing reserves. To eliminate shadow banking arrangements, a 100% tax on net interest income is proposed for limited liability businesses. All financing of businesses would be...

Rules-based monetary policy evaluation has long been central to macroeconomics. Using the original Taylor rule, a modified Taylor rule with a higher output gap coefficient, and an estimated Taylor rule, we define rules-based and discretionary eras by smaller and larger policy rule deviations,...

The Federal Reserve is always called an independent agency. The term “independent” is rarely defined. The only attempt in the literature and internal records is based on Chairman Martin’s statement that “the Federal Reserve is independent with the government, not independent of the...

This article examines the evolutionary forces involved in the development of monetary policy rules over time, considering in particular how these relate to proposals made by Milton Friedman and Walter Bagehot. The lines between money and credit and between monetary and fiscal policy are given...

Communication by central banks has two goals to fulfill: One is to be accountable and transparent to the public for its policy. The other is to make monetary policy by guiding expectations as effective as possible. Diversity of views inside the bank is instrumental for appropriate monetary...

This paper reviews and interprets some of the key policy implications that flow from a class of DSGE models for optimal monetary policy in the open economy. The framework suggests that good macroeconomic outcomes in open economies are possible by focusing inflation targeting that is implemented...

This paper considers the use of new Keynesian open economy models to evaluate monetary policy rules. While recognizing the importance policy evaluation with such models, it presents a number of criticisms about assumptions relating to wage determination, the real interest rate, divine...