IDEAS home Printed from https://ideas.repec.org/p/lev/levppb/ppb_15.html
   My bibliography  Save this paper

Monetary Policy Uncovered, Flying Blind: The FederalReserve's Experiment with Unobservables

Author

Listed:
  • Dimitri B. Papadimitriou
  • L. Randall Wray

Abstract

Experience with a variety of targets has cast doubt on the likelihood that a single variable can be found to be closely and reliably linked to future inflation; it is even less likely that such a variable, should it be found, would somehow be under the control and manipulation of the Federal Reserve. Papadimitriou and Wray review the experiments with various targets undertaken by former Fed chairman Paul Volcker and current chairman Alan Greenspan. The authors contend that there is no reason to suppose that the Fed will discover a target variable whose control will yield stable prices. Finally, they conclude that economists lack sufficient information to calculate the costs of achieving stable prices in terms of unemployment and lost output.

Suggested Citation

  • Dimitri B. Papadimitriou & L. Randall Wray, "undated". "Monetary Policy Uncovered, Flying Blind: The FederalReserve's Experiment with Unobservables," Economics Public Policy Brief Archive ppb_15, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_15
    as

    Download full text from publisher

    File URL: http://www.levyinstitute.org/pubs/ppb15.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael F. Bryan & Stephen G. Cecchetti, 1994. "Measuring Core Inflation," NBER Chapters, in: Monetary Policy, pages 195-219, National Bureau of Economic Research, Inc.
    2. Friedman, Milton, 1984. "Lessons from the 1979-82 Monetary Policy Experiment," American Economic Review, American Economic Association, vol. 74(2), pages 397-400, May.
    3. Steven M. Fazzari, 1995. "Why Doubt the Effectiveness of Keynesian Fiscal Policy?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 17(2), pages 231-248, January.
    4. John B. Carlson, 1993. "Assessing real interest rates," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    5. Daniel L. Thornton, 1988. "The borrowed-reserves operating procedures: theory and evidence," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 30-54.
    6. Henry B. Gonzalez, 1993. "An Open Letter to the President," Challenge, Taylor & Francis Journals, vol. 36(5), pages 30-31, September.
    7. Friedman, Benjamin M, 1984. "Lessons from the 1979-82 Monetary Policy Experiment," American Economic Review, American Economic Association, vol. 74(2), pages 382-387, May.
    8. Joseph A. Ritter, 1993. "The FOMC in 1992: a monetary conundrum," Review, Federal Reserve Bank of St. Louis, issue May, pages 31-49.
    9. Steven M. Fazzari, 1994. "Why Doubt the Effectiveness of Keynesian Fiscal Policy?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(2), pages 231-248, December.
    10. David A. Levy, 1991. "1990s: A Contained Depression," Challenge, Taylor & Francis Journals, vol. 34(4), pages 35-42, July.
    11. Alan Greenspan, 1989. "Statement by Alan Greenspan," Journal of Applied Corporate Finance, Morgan Stanley, vol. 2(1), pages 31-34, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dimitri B. Papadimitriou & L. Randall Wray, 1994. "Flying Blind: The Federal Reserve's Experiment with Unobservables," Economics Working Paper Archive wp_124, Levy Economics Institute.
    2. Salah S. ABOSEDRA & Hassan ALY & Ali F. DARRAT, 2001. "Assessing the Role of Financial Deepening in Business Cycles: The Experience of the United Arab Emirates," Middle East and North Africa 330400001, EcoMod.
    3. Bennett T. McCallum, 1984. "Credibility and monetary policy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 105-135.
    4. Michael T. Belongia & Peter N. Ireland, 2015. "Interest Rates and Money in the Measurement of Monetary Policy," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 33(2), pages 255-269, April.
    5. Amaresh Das, 2011. "Teaching by infusing Topics: Money and Banking," Journal of Education and Vocational Research, AMH International, vol. 1(1), pages 13-20.
    6. Huh, Chan G. & Lansing, Kevin J., 2000. "Expectations, credibility, and disinflation in a small macroeconomic model," Journal of Economics and Business, Elsevier, vol. 52(1-2), pages 51-86.
    7. Rik Hafer, 2001. "What remains of monetarism?," Economic Review, Federal Reserve Bank of Atlanta, vol. 86(Q4), pages 13-33.
    8. Ronald Hoffman & Mickey D. Levy, 1984. "Economic And Budget Issues For Deficit Policy," Contemporary Economic Policy, Western Economic Association International, vol. 3(1), pages 96-114, September.
    9. Dumitriu, Ramona & Stefanescu, Răzvan, 2020. "Iluzii financiare, Partea întâi [Financial Illusions, Part 1]," MPRA Paper 101201, University Library of Munich, Germany, revised 17 Jun 2020.
    10. Ono, Sadayuki, 2019. "Term structure dynamics in a monetary economy with learning," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 730-745.
    11. Christian Bordes & Samuel Maveyraud, 2008. "The Friedman's and Mishkin's Hypotheses (Re)Considered," Post-Print hal-00308571, HAL.
    12. David Laidler, 2013. "Mark Blaug on the quantity theory: a skirmish on the border between science and ideology in the history of economic thought," Chapters, in: Marcel Boumans & Matthias Klaes (ed.), Mark Blaug: Rebel with Many Causes, chapter 7, pages 63-77, Edward Elgar Publishing.
    13. Cem Çakmakli, 2012. "Bayesian Semiparametric Dynamic Nelson-Siegel Model," Working Paper series 59_12, Rimini Centre for Economic Analysis, revised Sep 2012.
    14. Claudiu Tiberiu Albulescu & Daniel Goyeau & Cornel Oros, 2015. "On the Long Run Money-Prices Relationship in CEE Countries," Economic Research Guardian, Weissberg Publishing, vol. 5(1), pages 73-96, June.
    15. Bahmani-Oskooee, Mohsen & Maki Nayeri, Majid, 2020. "Policy uncertainty and the demand for money in the United Kingdom: Are the effects asymmetric?," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 76-84.
    16. Çakmaklı, Cem & Paap, Richard & van Dijk, Dick, 2013. "Measuring and predicting heterogeneous recessions," Journal of Economic Dynamics and Control, Elsevier, vol. 37(11), pages 2195-2216.
    17. Guerello, Chiara, 2016. "The effect of investors’ confidence on monetary policy transmission mechanism," The North American Journal of Economics and Finance, Elsevier, vol. 37(C), pages 248-266.
    18. Daniel J. Richards, 1993. "What inflation policy do American voters want, and do they get it?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 33-44.
    19. Karl Pinno & Apostolos Serletis, 2016. "Money, Velocity, and the Stock Market," Open Economies Review, Springer, vol. 27(4), pages 671-695, September.
    20. Dilruba Yesmin Smrity & Muhaiminul Islam Selim, 2020. "Exchange Rate Uncertainty and the Demand for Money in Bangladesh: An Analysis of VECM Model," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(4), pages 241-247, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lev:levppb:ppb_15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elizabeth Dunn (email available below). General contact details of provider: http://www.levyinstitute.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.