Simulating the Effects of Some Simple Coordinated Versus Uncoordinated Policy

62 Pages Posted: 5 Apr 2010 Last revised: 2 Jan 2023

See all articles by Jacob A. Frenkel

Jacob A. Frenkel

affiliation not provided to SSRN

Morris Goldstein

Peter G. Peterson Institute for International Economics

Paul R. Masson

affiliation not provided to SSRN

Date Written: April 1989

Abstract

Effects of different policy rules are simulated: uncoordinated targeting of the money supply or nominal income, use of monetary policy to achieve coordinated targets for nominal or real exchange rates, and the use of monetary and fiscal policies to hit targets for internal and external balance. The following conclusions emerge: rules which performed best for some shocks performed poorly for others; monetary policy was ineffective in limiting movements in real exchange rates; unconstrained use of fiscal policy was quite powerful in influencing real variables; and dynamic instability was a potentially serious problem. Robustness to different specifications and to constraints on instruments remains to be examined.

Suggested Citation

Frenkel, Jacob A. and Goldstein, Morris and Masson, Paul R., Simulating the Effects of Some Simple Coordinated Versus Uncoordinated Policy (April 1989). NBER Working Paper No. w2929, Available at SSRN: https://ssrn.com/abstract=1582843

Jacob A. Frenkel

affiliation not provided to SSRN

No Address Available

Morris Goldstein

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
United States

Paul R. Masson

affiliation not provided to SSRN

No Address Available