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The Reader's Guide to Optimal Monetary Policy

31 Pages Posted: 20 Jun 2017 Last revised: 26 Jun 2017

Anthony M. Diercks

Board of Governors of the Federal Reserve System: Monetary and Financial Market Analysis

Date Written: June 18, 2017

Abstract

Recently, multiple economists have banded together to suggest to the Federal Reserve that the inflation target needs to be changed. The inflation target is the core through which monetary policy makers rationalize their decisions while following the dual mandate of maximum employment and price stability. Understanding the rationale for its level, 2%, and understanding the academic literature related to optimal inflation dynamics seems more important than ever before. This survey takes into account every optimal monetary policy paper made available to the public since the mid-1990s and provides a careful discussion on the most important costs and benefits of inflation.

Keywords: Optimal Monetary Policy, Inflation, Federal Reserve

JEL Classification: E5, G00, E00

Suggested Citation

Diercks, Anthony M., The Reader's Guide to Optimal Monetary Policy (June 18, 2017). Available at SSRN: https://ssrn.com/abstract=2989237

Anthony Diercks (Contact Author)

Board of Governors of the Federal Reserve System: Monetary and Financial Market Analysis ( email )

20th and C Streets, NW
Washington, DC 20551
United States

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