Monetary Policy in the Presence of a Stochastic Deficit Pubblico Deposited

Creator Series Issue number
  • 123
Date Created
  • 1979-01
  • In "Open Market Operations in a Model of Regulated, Insured Intermediaries" [JPE, forthcoming] we show that once-for-all open market purchases need not be inflationary. Here we show this result can carry over to various stationary accommodation rules given stochastic deficits. In particular, the inflationary and deflationary effects of stochastic deficits are not offset by, nor welfare improved by, a monetary policy that leans toward monetarism. Moreover, a constant money growth rule is not in the class of stationary policies given the kind of stochastic deficit we analyze, which by itself is a serious indictment of the monetarist proposal.

Subject (JEL) Parola chiave Alternative title
  • Open market operations in a model of regulated, insured intermediaries / John Bryant, Neil Wallace.
Date Modified
  • 07/08/2019
Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
  • Federal Reserve Bank of Minneapolis
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