A Mandate for Price Stability

9 Pages Posted: 3 Nov 2012

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 1990

Abstract

This paper argues for passage of the Neal Resolution, which would make price level stability the dominant goal of monetary policy. The alternative to a rule that mandates price stability is the exercise of ongoing discretion over the desired price level. This discretion, it is argued, encourages groups that benefit from high and variable inflation to lobby the political system. A rule is desirable primarily because it limits the incentives for special-interest politics.

Suggested Citation

Hetzel, Robert L., A Mandate for Price Stability (1990). FRB Richmond Economic Review, vol. 76, no. 2, March/April 1990, pp. 45-53, Available at SSRN: https://ssrn.com/abstract=2122658

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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