The Reader's Guide to Optimal Monetary Policy

33 Pages Posted: 20 Jun 2017 Last revised: 17 Aug 2019

See all articles by Anthony M. Diercks

Anthony M. Diercks

Board of Governors of the Federal Reserve System

Date Written: August 10, 2019


This document serves as an update with discussion of the accompanying new interactive visualization and table tool. 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 (August 10, 2019). Available at SSRN: or

Anthony M. Diercks (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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