Few economic events of recent years have attracted as much attention as the announcement by the People?s Bank of China on July 21, 2005, that henceforth the exchange rate of the Renminbi (RMB) would not be kept fixed in relation to the U.S. dollar, but would be managed relative to a basket of...

During the early months of 2003, there was something of a buzz in monetary policy circles about the prospect of a move toward inflation targeting as a policy regime for the Federal Reserve. One leading manifestation was a prominent article in the Wall Street Journal on March 31 concerning the...

The SOMC is a collection of individuals, so we do not always agree fully on all issues. There are certain similarities of viewpoint across individuals, however, that give a recognizable flavor to most of the committee?s analyses and positions. Three leading examples are beliefs that governmental...

At our last meeting of the Shadow Open Market Committee, in April, I discussed Japanese monetary policy. Specifically, I argued (i) that it has been overly restrictive for almost a decade, (ii) that the Bank of Japan?s policy changes of March 19, 2001, are welcome but probably insufficient,...

The United States is almost alone among industrial countries in having no monetary standard. It has, that is, no institutionalized guarantee or even explicit objective concerning the purchasing power of its money. Between 1971 and 1990, this was true of most industrial countries but since then...

Arguments are developed concerning a number of topics including long-run monetary neutrality, superneutrality, the natural-rate hypothesis, the quantity theory of money, the equation of exchange, the Fisher equation, and purchasing power parity. These are basic, fundamental topics that all...

During the past several years, a striking body of literature has appeared in which it is argued that general price level determination is essentially a fiscal, rather than monetary, phenomenon. The most prominent papers have been those of Woodford (1994, 1995, 2001), Sims (1994, 1997), Leeper...

This paper compares the P-bar model of price adjustment with the currently dominant Calvo specification. Theoretically, the P-bar model is more attractive as it depends on adjustment costs for physical quantities rather than nominal prices, while incorporating a one-period information lag....

For introductory presentation of issues involving identification and estimation of simultaneous equation systems, a natural vehicle is a model consisting of supply and demand relationships to explain price and quantity variables for a single good. One would accordingly expect to find in...

The paper reviews issues related to the zero lower bound (ZLB) on interest rates and argues that all of the following propositions are invalid: (1) in a ZLB situation, "shaping interest rate expectations is essentially the only tool that central bankers have" (Bernanke, Reinhart, and Sack...