An Introduction to Monetary Policy Rules

41 Pages Posted: 7 Jun 2018

See all articles by Alexander William Salter

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

Date Written: 12/04/2014

Abstract

This paper is an introduction to contemporary discussions within monetary theory and policy. The paper focuses on comparing proposals for monetary policy rules. It first lays out an argument for why monetary policy?defined here broadly to mean adjusting the money supply in an attempt to influence the economy?is desirable in the first place. It then presents an argument for why rules-based monetary policy is preferable to discretionary policy. Next it discusses at a general level two kinds of rules: those that can be implemented with minimal changes to current monetary institutions (i.e., central banking) and those that would require significant institutional changes to implement. The discussion is primarily an effort to promote informed participation in the democratic process.

Suggested Citation

Salter, Alexander William, An Introduction to Monetary Policy Rules (12/04/2014). MERCATUS WORKING PAPER. Available at SSRN: https://ssrn.com/abstract=3191382 or http://dx.doi.org/10.2139/ssrn.3191382

Alexander William Salter (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

HOME PAGE: http://awsalter.com

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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