A Monetary Impulse Measure for Medium-Term Policy Analysis

34 Pages Posted: 15 Feb 2006

See all articles by Bennett T. McCallum

Bennett T. McCallum

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Monica Hargraves

affiliation not provided to SSRN

Date Written: December 1994

Abstract

The paper presents a measure of monetary impulse that is intended to reflect the medium-term inflationary implications of a nation`s current monetary policy. The measure consists of the growth rate of the monetary base, adjusted for reserve requirement changes and augmented by an implicit forecast of future growth rates of base velocity. Time series plots of the impulse measure for the G-7 countries are presented, and are compared with plots of inflation and of two alternative monetary indicatorsthe yield curve slope and the growth rate of a broad monetary aggregate. The impulse measure serves well as a medium-term indicator of future inflation, and on balance matches or outperforms the alternative indicators.

JEL Classification: E52, E31, E37

Suggested Citation

McCallum, Bennett T. and Hargraves, Monica, A Monetary Impulse Measure for Medium-Term Policy Analysis (December 1994). IMF Working Paper, Vol. , pp. 1-34, 1994. Available at SSRN: https://ssrn.com/abstract=883905

Bennett T. McCallum (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2347 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Monica Hargraves

affiliation not provided to SSRN

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