Optimal Monetary Policy: What We Know and What We Don’t Know

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Creator Series Issue number
  • Vol. 29, No. 1
Date created
  • 2005-10
Abstract

  • In this article, I examine the current state of knowledge about optimal monetary policy. I distinguish between two literatures, basic and applied. The basic literature is explicit about the frictions that generate a positive value for money and make it socially beneficial. The applied literature is not. I describe the recent lessons about monetary policy that we have learned from each literature and discuss how the two distinct approaches may be usefully combined.

Related information

  • Reprinted, with permission, from the International Economic Review (May 2005, vol. 46, no. 2, pp. 715–29): “Optimal Monetary Policy: What We Know and What We Don’t Know” by Narayana R. Kocherlakota. © 2005 by Blackwell Publishing. https://doi.org/10.1111/j.1468-2354.2005.00343.x

Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
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