Should the Fed Smooth Interest Rates? the Case of Seasonal Monetary Policy

42 Pages Posted: 11 Apr 2011

See all articles by N. Gregory Mankiw

N. Gregory Mankiw

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Jeffrey A. Miron

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 1990

Abstract

This paper examines the choice of monetary policy in response to seasonal fluctuations in the economy. It discusses the costs and benefits of smoothing interest rates over the seasons, which has been the Fed's policy since its founding in 1914, and presents simulations suggesting how the economy would behave under the alternative policy of stabilizing the money stock. Finally, it presents evidence that the smoothing of interest rates in 1914 changed the seasonal business cycle.

Suggested Citation

Mankiw, N. Gregory and Miron, Jeffrey A., Should the Fed Smooth Interest Rates? the Case of Seasonal Monetary Policy (June 1990). NBER Working Paper No. w3388. Available at SSRN: https://ssrn.com/abstract=1803946

N. Gregory Mankiw (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Jeffrey A. Miron

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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