Price-Level Stabilization and Full Employment as Objectives of Monetary Policy

1951 ◽  
Vol 24 (3) ◽  
pp. 220
Author(s):  
D. A. Fergusson
Keyword(s):  
Monetary Policy ◽  
Price Level ◽  
Full Employment

scholarly journals A RECONSIDERATION OF THE DOCTRINAL FOUNDATIONS OF MONETARY POLICY RULES: FISHER VERSUS CHICAGO

2021 ◽  
Vol 43 (1) ◽  
pp. 55-82
Author(s):  
George S. Tavlas
Keyword(s):  
Monetary Policy ◽  
Price Level ◽  
Policy Instruments ◽  
Policy Instrument ◽  
Superior Performance ◽  
Policy Uncertainty ◽  
Direct Link ◽  
Policy Rule ◽  
Policy Rules ◽  
Monetary Policy Rules

There has long been a presumption that the price-level stabilization frameworks of Irving Fisher and Chicagoans Henry Simons and Lloyd Mints were essentially equivalent. I show that there were subtle, but important, differences in the rationales underlying the policies of Fisher and the Chicagoans. Fisher’s framework involved substantial discretion in the setting of the policy instruments; for the Chicagoans the objective of a policy rule was to tie the hands of the authorities in order to reduce discretion and, thus, monetary policy uncertainty. In contrast to Fisher, the Chicagoans provided assessments of the workings of alternative rules, assessed various criteria—including simplicity and reduction of political pressures—in the specification of rules, and concluded that rules would provide superior performance compared with discretion. Each of these characteristics provided a direct link to the rules-based framework of Milton Friedman. Like Friedman’s framework, Simons’s preferred rule targeted a policy instrument.

scholarly journals Albania's Monetary Policy and the Basic Indicators that Effect the Economic Growth

2019 ◽  
Vol 2 (2) ◽  
pp. 51
Author(s):  
Bernard Balla
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Full Employment ◽  
Price Stability ◽  
Macroeconomic Policies ◽  
Consumer Prices

Macroeconomic policies aim to stabilize the economy by achieving their goal of price stability, full employment and economic growth. Price stability is the responsibility of macroeconomic policies that are developed to maintain a low inflation rate, contribute to the solidity of the domestic product and maintain an exchange rate that can be predictable. The purpose of this paper is to analyze Albania's monetary policy by highlighting the main indicators that can be used as a measurement of the efficiency of this policy in the economic development. The literature review shows that there are many attitudes regarding the factors that need to be taken into consideration when analyzing monetary policies, including the elements of fiscal policies. In the Albanian economy, the prices and the level of inflation are the most important aspects. The Bank of Albania uses the inflation targeting regime, considering that the main indicator of inflationary pressures in the economy is the deviation of inflation forecasted in the medium term by its target level. In numerical terms, the bank intends to maintain its annual growth in consumer prices at the level of 3%. According to the latest reports published by the Bank of Albania in 2019, monetary policy continues to contribute positively to a financial environment with a low interest rate and an annual inflation rate of 2%. Although the inflation rate hit the lowest value of 1.8 % in 2018, a balanced rate was achieved through the reduction of interest rates and risk premiums in financial markets and, more recently, through the tightening of the exchange rate. These monetary conditions are appropriate to support the growth of domestic demand and the strengthening of inflationary pressures.

The Coming of J. M. Keynes

Money ◽  
2017 ◽  
Author(s):  
John Kenneth Galbraith ◽  
James K. Galbraith
Keyword(s):  
Monetary Policy ◽  
General Theory ◽  
Economic System ◽  
Money Supply ◽  
Full Employment ◽  
Gold Content ◽  
Fiscal Policies ◽  
Theoretical Justification

This chapter examines John Maynard Keynes's views with respect to money. It first considers Keynes's argument that, left to itself and given time, the economic system would find its equilibrium with all or nearly all its willing workers employed. If Keynes's instinct were right, the hopes of the monetary radicals would also destroyed. A change in the gold content of the dollar or an increase in banks' reserves would not mean more borrowers, more deposits, more money and a surge of the economy back to full employment. It followed that monetary policy would not work. What was needed was a policy that increased the money supply available for use and then ensured its use. The chapter considers Keynes's theoretical justification for his views in the 1936 book The General Theory of Employment Interest and Money, the fiscal policies he advocated, his repudiation of Say's Law, and Keynesian policies on taxation.

The Impact of Oil Price Volatility on China’s Economy: An Empirical Investigation Based on VAR Model

2012 ◽  
Vol 524-527 ◽  
pp. 3211-3215 ◽  
Author(s):  
Shu Ping Wang ◽  
Ai Mei Hu ◽  
Zhen Xin Wu
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Monetary Policy ◽  
Price Level ◽  
Price Volatility ◽  
Oil Price ◽  
Economic Growth Rate ◽  
Oil Price Volatility ◽  
China’S Economy

China has been in rapid economic growth and industrial structure reform for recent years, and oil, as a most important raw material for industrial production, its price fluctuations have direct impact on energy-intensive industries as well as non-energy-intensive industries and their associated industries’ overall demands. Under the price transmission mechanism, oil price volatility imposes significant influences on economic growth rate, price level, unemployment rate and monetary policy as well. This paper established VAR model among oil prices and economic indicators such as economic growth rate, price level, unemployment rate and monetary policy, and by data processing , stability test and cointegration test, we found that there existed long term stable cointegration relations among these sequences; through Granger Causality test we found that oil price volatility was the Granger cause of the fluctuations of economic growth rate, price level and monetary policy, and meanwhile, changes in economic growth rate is the Granger cause of that in price level. The result of our empirical study indicated that, oil price volatility has a profound influence on China’s economy, and thus, China should improve the establishment of the oil futures market to avoid risks of oil price volatility and secure long-term stability of its economic growth.

Controlling Money Supply And Price Level With Unknown Regime Shifts: The Case Of Chile

2011 ◽  
Vol 24 (2) ◽  
Author(s):  
Abdulnasser Hatemi-J ◽  
Manuchehr Irandoust
Keyword(s):  
Monetary Policy ◽  
Steady State ◽  
Money Supply ◽  
Price Level ◽  
Regime Shifts ◽  
Font Size ◽  
Long Run ◽  
Causality Tests ◽  
The Relationship ◽  
Second Period

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;" lang="EN-GB"><span style="font-family: Times New Roman;">This paper investigates the relationship between money supply and price level using new tests for cointegration with two unknown regime shifts and bootstrap causality tests. Quarterly Chilean data from 1973: I to 2006: III is used. We find empirical evidence that the variables establish a long-run steady state relationship in the presence of two regime shifts. The elasticity of price level with regard to money supply is close to unity during the first period (prior to 1978: II). The elasticity is reduced during the second period (1978: III-1986: I) and it is also reduced for the remaining period but the reduction is smaller. We also conducted bootstrap causality tests that reveal the following: in the first sub-period there is bidirectional causality between the underlying variables. In the last two sub-periods money supply causes the price level only. This implies that money supply is weakly exogenous concerning the price level and that the monetary authority had enough independence to execute an active monetary policy in Chile. <span style="mso-bidi-font-weight: bold;"></span></span></span></p>

Full employment will boost US wage growth

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Labour Market ◽  
Federal Reserve ◽  
Full Employment ◽  
Participation Rate ◽  
Job Seekers ◽  
Secular Stagnation ◽  
Content Type ◽  
Percentage Points ◽  
Jobless Rate

Significance The jobless rate is expected to stay unchanged at 4.9%, its lowest level since November 2007. This decline occurred despite a rebound in the participation rate, up 0.5 percentage points (pp) since September and back to its January 2015 level. Labour market behaviour will be a key determinant of the Federal Reserve (Fed)'s pace of monetary policy tightening this year. Impacts Higher cyclical unemployment may become structural through 'hysteresis', as job seekers become discouraged and stop looking for jobs. Structural declines in the participation rate may be one way in which 'secular stagnation' manifests in post-crisis economies. The Fed will monitor closely any overheating risk in the labour market, together with escalating wage and price pressures.

The Zero Interest Rate Floor (ZIF) and its Implications for Monetary Policy in Japan

2004 ◽  
Vol 187 ◽  
pp. 76-92 ◽  
Author(s):  
Benjamin Hunt ◽  
Douglas Laxton
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Price Level ◽  
Macroeconomic Model ◽  
Policy Strategies

This paper uses the IMF's macroeconomic model MULTIMOD to examine the implications of the zero interest rate floor (ZIF) for the design of monetary policy in Japan. Similar to findings in other studies, targeting rates of inflation lower than 2.0 per cent significantly increases the likelihood of the ZIF becoming binding. Systematic monetary policy strategies that respond strongly to stabilise output and inflation, or that incorporate some explicit price-level component, can help to mitigate the implications of the ZIF.

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