Optimal Monetary Policy: What We Know and What We Don't Know

15 Pages Posted: 5 May 2005

See all articles by Narayana Kocherlakota

Narayana Kocherlakota

University of Minnesota - Twin Cities - Department of Economics

Abstract

In this article, I examine the current state of knowledge about optimal monetary policy. I distinguish between two literatures, basic and applied. The basic literature is explicit about the frictions that generate a positive value for money and make it socially beneficial. The applied literature is not. I describe the recent lessons about monetary policy that we have learned from each literature and discuss how the two distinct approaches may be usefully combined.

Suggested Citation

Kocherlakota, Narayana, Optimal Monetary Policy: What We Know and What We Don't Know. International Economic Review, Vol. 46, No. 2, pp. 715-729, May 2005. Available at SSRN: https://ssrn.com/abstract=714285

Narayana Kocherlakota (Contact Author)

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States
612-625-5318 (Phone)
612-624-0209 (Fax)

HOME PAGE: http://www.econ.umn.edu/~nkocher/

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