Interest and Prices – Foundations of a Theory of Monetary Policy - Hardcover

Woodford, Michael

Hardcover

ISBN 10: 0691010498 ISBN 13: 9780691010496

Publisher: Princeton University Press, 2003

Synopsis

With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980s, most central banks have abandoned money-growth targets as practical guidelines for monetary policy as well. How then can pure "fiat" currencies be managed so as to create confidence in the stability of national units of account? Interest and Prices seeks to provide theoretical foundations for a rule-based approach to monetary policy suitable for a world of instant communications and ever more efficient financial markets. In such a world, effective monetary policy requires that central banks construct a conscious and articulate account of what they are doing. Michael Woodford reexamines the foundations of monetary economics, and shows how interest-rate policy can be used to achieve an inflation target in the absence of either commodity backing or control of a monetary aggregate. The book further shows how the tools of modern macroeconomic theory can be used to design an optimal inflation-targeting regime--one that balances stabilization goals with the pursuit of price stability in a way that is grounded in an explicit welfare analysis, and that takes account of the "New Classical" critique of traditional policy evaluation exercises. It thus argues that rule-based policymaking need not mean adherence to a rigid framework unrelated to stabilization objectives for the sake of credibility, while at the same time showing the advantages of rule-based over purely discretionary policymaking.

About this title

About the Author

Michael Woodford is the Harold H. Helm '20 Professor of Economics and Banking at Princeton University. He is the coeditor, with John B. Taylor, of "The Handbook of Macroeconomics".

From the Back Cover

"This long-awaited book by master macroeconomist Michael Woodford belongs on the bookshelf of every economist. Woodford is well-known as one of the world's current most original thinkers in economics. In this book you will find not only a unified treatment of the theoretical foundations of monetary policy, optimal policy inertia, indicator variables for optimal policy, monetary policy in a world without money, fiscal requirements for price stability, optimal rules for setting interest rates, and much more, but also practical details of implementation such as methods used by various central banks for controlling interest rates."--William A. Brock, University of Wisconsin, Madison

"Michael Woodford's Interest and Prices is a major contribution to economics. The book it most resembles is Patinkin's classic Money, Interest, and Prices now nearly 40 years old--and it may well have the same impact. Woodford's book illustrates the immense progress that macroeconomics has made in the past generation, from its careful treatment of dynamics and of optimizing behavior, to its discussion of optimal monetary policy. It is an impressive intellectual achievement, all the way from abstract theory to Taylor rules for central banks. I have gone to it, pen and paper in hand, many times over the past few years when it was still a manuscript. Each time, I found it illuminating. This book is a classic."--Olivier Blanchard, Massachusetts Institute of Technology

"The ideas contained in Michael Woodford's book Interest and Prices have influenced the way central bank economists-to say nothing of academic economists-in every corner of the world think about the conduct of monetary policy. These ideas form the most significant original book-length contribution to monetary economics since Don Patinkin's Money, Interest, and Prices. Woodford's insights into a cashless world will prove enduring."--Fumio Hayashi, University of Tokyo, author of Econometrics

"This is the most important book in monetary theory in at least two decades, illustrating all the major conceptual ideas in modern monetary economics, and then some. Woodford's book is especially commendable for its forward-looking elements, such as how to conduct monetary policy in a near cashless society, and how international currencies may coexist when global financial markets become truly integrated. Some of the individual chapters are already firmly established as standard technical references for modern methods in monetary policy economics. By showing how to stretch the limits of purely analytical methods, the book also builds a bridge from classical monetary theory to modern computational macroeconomics, possibly pointing the way to a new generation of medium-scale macroeconomic models."--Kenneth Rogoff, Economic Counselor and Director of Research, International Monetary Fund

"This book is a masterpiece. Michael Woodford provides a lucid dynamic synthesis of two schools of thought--Monetarism versus New Keynesianism--that have recently been the subject of a remarkable convergence of thinking among macroeconomists."--Assaf Razin, Tel Aviv University, author of Fiscal Policies and Growth in the World Economy

"This is a landmark work that reevaluates monetary theory and policy in an intertemporal optimization framework with sticky prices. Well written, it systematically revisits classic issues in monetary theory and allows rigorous welfare analyses."--Maurice Obstfeld, University of California, Berkeley, coauthor of Foundations of International Macroeconomics

"A new landmark treatise on monetary theory. A must read for econo-nerds."--N. Gregory Mankiw, Chairman of the Council of Economic Advisors, citing his "favorite purchase of 2003" in The New York Times

From the Inside Flap

"This long-awaited book by master macroeconomist Michael Woodford belongs on the bookshelf of every economist. Woodford is well-known as one of the world's current most original thinkers in economics. In this book you will find not only a unified treatment of the theoretical foundations of monetary policy, optimal policy inertia, indicator variables for optimal policy, monetary policy in a world without money, fiscal requirements for price stability, optimal rules for setting interest rates, and much more, but also practical details of implementation such as methods used by various central banks for controlling interest rates."--William A. Brock, University of Wisconsin, Madison

"Michael Woodford's Interest and Prices is a major contribution to economics. The book it most resembles is Patinkin's classicMoney, Interest, and Prices now nearly 40 years old--and it may well have the same impact. Woodford's book illustrates the immense progress that macroeconomics has made in the past generation, from its careful treatment of dynamics and of optimizing behavior, to its discussion of optimal monetary policy. It is an impressive intellectual achievement, all the way from abstract theory to Taylor rules for central banks. I have gone to it, pen and paper in hand, many times over the past few years when it was still a manuscript. Each time, I found it illuminating. This book is a classic."--Olivier Blanchard, Massachusetts Institute of Technology

"The ideas contained in Michael Woodford's book Interest and Prices have influenced the way central bank economists-to say nothing of academic economists-in every corner of the world think about the conduct of monetary policy. These ideas form the most significant original book-length contribution to monetary economics since Don Patinkin'sMoney, Interest, and Prices. Woodford's insights into a cashless world will prove enduring."--Fumio Hayashi, University of Tokyo, author ofEconometrics

"This is the most important book in monetary theory in at least two decades, illustrating all the major conceptual ideas in modern monetary economics, and then some. Woodford's book is especially commendable for its forward-looking elements, such as how to conduct monetary policy in a near cashless society, and how international currencies may coexist when global financial markets become truly integrated. Some of the individual chapters are already firmly established as standard technical references for modern methods in monetary policy economics. By showing how to stretch the limits of purely analytical methods, the book also builds a bridge from classical monetary theory to modern computational macroeconomics, possibly pointing the way to a new generation of medium-scale macroeconomic models."--Kenneth Rogoff, Economic Counselor and Director of Research, International Monetary Fund

"This book is a masterpiece. Michael Woodford provides a lucid dynamic synthesis of two schools of thought--Monetarism versus New Keynesianism--that have recently been the subject of a remarkable convergence of thinking among macroeconomists."--Assaf Razin, Tel Aviv University, author of Fiscal Policies and Growth in the World Economy

"This is a landmark work that reevaluates monetary theory and policy in an intertemporal optimization framework with sticky prices. Well written, it systematically revisits classic issues in monetary theory and allows rigorous welfare analyses."--Maurice Obstfeld, University of California, Berkeley, coauthor of Foundations of International Macroeconomics

"A new landmark treatise on monetary theory. A must read for econo-nerds."--N. Gregory Mankiw, Chairman of the Council of Economic Advisors, citing his "favorite purchase of 2003" inThe New York Times

Excerpt. © Reprinted by permission. All rights reserved.

Interest and Prices

Foundations of a Theory of Monetary PolicyBy MICHAEL WOODFORD

Princeton University Press

Copyright © 2003 Princeton University Press
All right reserved.
ISBN: 978-0-691-01049-6

Contents

PREFACE....................................................................................xiii1 The Return of Monetary Rules............................................................11 The Importance of Price Stability........................................................42 The Importance of Policy Commitment......................................................143 Monetary Policy without Control of a Monetary Aggregate..................................244 Interest-Rate Rules......................................................................375 Plan of the Book.........................................................................552 Price-Level Determination under Interest-Rate Rules.....................................611 Price-Level Determination in a Cashless Economy..........................................622 Alternative Interest-Rate Rules..........................................................853 Price-Level Determination with Monetary Frictions........................................1014 Self-Fulfilling Inflations and Deflations................................................1233 Optimizing Models with Nominal Rigidities...............................................1391 A Basic Sticky-Price Model...............................................................1432 Inflation Dynamics with Staggered Pricesetting...........................................1733 Delayed Effects of Nominal Disturbances on Inflation.....................................2044 Consequences of Nominal Wage Stickiness..................................................2184 A Neo-Wicksellian Framework for the Analysis of Monetary Policy.........................2371 A Basic Model of the Effects of Monetary Policy..........................................2382 Interest-Rate Rules and Price Stability..................................................2473 Money and Aggregate Demand...............................................................2954 Fiscal Requirements for Price Stability..................................................3115 Dynamics of the Response to Monetary Policy.............................................3201 Delayed Effects of Monetary Policy.......................................................3212 Some Small Quantitative Models...........................................................3363 Monetary Policy and Investment Dynamics..................................................3526 Inflation Stabilization and Welfare.....................................................3811 Approximation of Loss Functions and Optimal Policies.....................................3832 A Utility-Based Welfare Criterion........................................................3923 The Case for Price Stability.............................................................4054 Extensions of the Basic Analysis.........................................................4195 The Case of Larger Distortions...........................................................4557 Gains from Commitment to a Policy Rule...................................................4641 The Optimal Long-Run Inflation Target....................................................4682 Optimal Responses to Disturbances........................................................4843 Optimal Simple Policy Rules..............................................................5074 The Optimal State-Contingent Instrument Path as a Policy Rule............................5175 Commitment to an Optimal Targeting Rule..................................................5218 Optimal Monetary Policy Rules...........................................................5341 A General Linear-Quadratic Framework.....................................................5352 Optimal Inflation Targeting Rules........................................................5593 Optimal Interest-Rate Rules..............................................................5824 Reflections on Currently Popular Policy Proposals........................................610A Addendum to Chapter 2...................................................................627A.1 Proof of Proposition 2.1..............................................................627A.2 Proof of Proposition 2.2..............................................................628A.3 Log-Linearization and Determinacy of Equilibrium......................................630A.4 Proof of Proposition 2.3..............................................................635A.5 Proof of Proposition 2.4..............................................................637A.6 Proof of Proposition 2.5..............................................................638A.7 Proof of Proposition 2.7..............................................................639A.8 Proof of Proposition 2.8..............................................................640A.9 Proof of Proposition 2.9..............................................................641A.10 Proof of Proposition 2.10.............................................................643A.11 Proof of Proposition 2.11.............................................................644A.12 Proof of Proposition 2.12.............................................................645A.13 Proof of Proposition 2.13.............................................................646A.14 Proof of Proposition 2.14.............................................................646A.15 Proof of Proposition 2.15.............................................................647A.16 Monetary Frictions with an Alternative Timing Convention..............................649A.17 The Example of Schmitt-Groh and Uribe................................................653B Addendum to Chapter 3...................................................................656B.1 Non-CES Demand and Variable Markups...................................................656B.2 Proof of Proposition 3.3..............................................................657B.3 Proof of Proposition 3.4..............................................................659B.4 Proof of Proposition 3.5..............................................................661B.5 Proof of Proposition 3.6..............................................................662B.6 Proof of Proposition 3.7..............................................................664B.7 Proof of Proposition 3.8..............................................................666C Addendum to Chapter 4...................................................................670C.1 Determinacy of Equilibrium in Small Linear Models: Useful Results.....................670C.2 Proof of Proposition 4.3..............................................................676C.3 Proof of Proposition 4.4..............................................................677C.4 Proof of Proposition 4.5..............................................................681C.5 Proof of Proposition 4.6..............................................................682C.6 Proof of Proposition 4.7..............................................................683C.7 Proof of Proposition 4.9..............................................................683C.8 Proof of Proposition 4.11.............................................................685D Addendum to Chapter 5...................................................................687D.1 Alternative Interpretation of the Habit Persistence Model.............................687D.2 Proof of Proposition 5.1..............................................................688D.3 Proof of Proposition 5.2..............................................................691E Addendum to Chapter 6...................................................................692E.1 Proof of Proposition 6.1..............................................................692E.2 Proof of Proposition 6.3..............................................................694E.3 Proof of Proposition 6.6..............................................................696E.4 Proof of Proposition 6.7..............................................................698E.5 Proof of Proposition 6.9..............................................................700E.6 Proof of Proposition 6.10.............................................................703E.7 Proof of Proposition 6.11.............................................................705E.8 Proof of Proposition 6.12.............................................................707F Addendum to Chapter 7...................................................................709F.1 Proof of Proposition 7.6..............................................................709F.2 Proof of Proposition 7.9..............................................................710F.3 Proof of Proposition 7.10.............................................................712F.4 The Optimal Noninertial Plan..........................................................713F.5 Proof of Proposition 7.15.............................................................714F.6 Proof of Proposition 7.16.............................................................715G Addendum to Chapter 8...................................................................716G.1 Assumptions 8.3 and 8.4...............................................................716G.2 Assumption 8.5........................................................................719G.3 Technical Lemmas......................................................................719G.4 Proof of Proposition 8.5..............................................................721G.5 Proof of Proposition 8.6..............................................................723G.6 Proof of Proposition 8.7..............................................................724G.7 Proof of Proposition 8.8..............................................................727G.8 Proof of Proposition 8.9..............................................................730G.9 Proof of Proposition 8.10.............................................................737G.10 Proof of Proposition 8.11.............................................................739REFERENCES.................................................................................747INDEX......................................................................................765

Chapter One

The Return of Monetary Rules

If it were in our power to regulate completely the price system of the future, the ideal position ... would undoubtedly be one in which, without interfering with the inevitable variations in the relative prices of commodities, the general average level of money prices ... would be perfectly invariable and stable.

And why should not such regulation lie within the scope of practical politics? ... Attempts by means of tariffs, state subsidies, export bounties, and the like, to effect a partial modification of the natural order of [relative prices] almost inevitably involve some loss of utility to the community. Such attempts must so far be regarded as opposed to all reason. Absolute prices on the other hand-money prices-are a matter in the last analysis of pure convention, depending on the choice of a standard of price which it lies within our own power to make. -Knut Wicksell Interest and Prices, 1898, p. 4

The past century has been one of remarkable innovation in the world's monetary systems. At the turn of the twentieth century, it was taken for granted by practical men that the meaning of a monetary unit should be guaranteed by its convertibility into a specific quantity of some precious metal. Debates about monetary policy usually concerned the relative advantages of gold and silver standards or the possibility of a bimetallic standard. But through fits and starts, the world's currencies have come progressively to be more completely subject to "management" by individual central banks. Since the collapse of the Bretton Woods system of fixed exchange rates in the early 1970s, the last pretense of a connection of the world's currencies to any real commodity has been abandoned. We now live instead in a world of pure "fiat" units of account, where the value of each depends solely upon the policies of the particular central bank with responsibility for it.

This has brought both opportunities and challenges. On the one hand, vagaries of the market for gold or some other precious metal no longer cause variations in the purchasing power of money, with their disruptions of the pattern of economic activity. The recognition that the purchasing power of money need not be dictated by any "natural" market forces and is instead a proper subject of government regulation, as proposed by the monetary reformer Knut Wicksell a century ago, should in principle make possible greater stability of the standard of value, facilitating contracting and market exchange. At the same time, the responsibilities of the world's central banks are more complex under a fiat system than they were when the banks' tasks were simply to maintain convertibility of their respective national currencies into gold, and it was not immediately apparent how the banks' new freedom should best be used. Indeed, during the first decade of the new regime, the policies of many industrial nations suffered from a tendency toward chronic inflation, leading to calls from some quarters in the 1980s for a return to a commodity standard.

This has not proven to be necessary. Instead, since the 1980s the central banks of the major industrial nations have been largely successful at bringing inflation down to low and fairly stable levels. Nor does this seem to have involved any permanent sacrifice of other objectives. For example, real GDP growth has been if anything higher on average, and certainly more stable, since inflation was stabilized in the United States. Somewhat paradoxically, this period of improved macroeconomic stability has coincided with a reduction, in certain senses, in the ambition of central banks' efforts at macroeconomic stabilization. Banks around the world have committed themselves more explicitly to relatively straightforward objectives with regard to the control of inflation, and have found when they do so that not only is it easier to control inflation than previous experience might have suggested, but that price stability creates a sound basis for real economic performance as well.

What appears to be developing, then, at the turn of another century, is a new consensus in favor of a monetary policy that is disciplined by clear rules intended to ensure a stable standard of value, rather than one that is determined on a purely discretionary basis to serve whatever ends may seem most pressing at any given time. Yet the new monetary rules are not so blindly mechanical as the rules of the gold standard, which defined monetary orthodoxy a century ago. They are instead principles of systematic conduct for institutions that are aware of the consequences of their actions and take responsibility for them, choosing their policies with careful attention to what they accomplish. Indeed, under the current approaches to rule-based policymaking, more emphasis is given to explicit commitments regarding desired economic outcomes, such as a target rate of inflation, than to particular technical indicators that the central bank may find it useful to monitor in achieving that outcome.

The present study seeks to provide theoretical foundations for a rule-based approach to monetary policy of this kind. The development of such a theory is an urgent task, for rule-based monetary policy in the spirit that I have described is possible only when central banks can develop a conscious and articulate account of what they are doing. It is necessary in order for them to know how to act systematically in a way that can serve their objectives, which are now defined in terms of variables that are much further removed from their direct control. It is also necessary in order for them to be able to communicate the nature of their systematic commitments to the public, despite the absence of such mechanical constraints as a commitment to exchange currency for some real commodity. As I explain below, the advantages of a sound monetary policy are largely dependent upon the policy's being understood and relied upon by the private sector in arranging its affairs.

There can be little doubt that the past decade has seen a marked increase in the self-consciousness of central banks about the way in which they conduct monetary policy and in the explicitness of their communication with the public about their actions and the considerations upon which they are based. A particularly important development in this regard has been the adoption of "inflation targeting" as an approach to the conduct of monetary policy by many of the world's central banks in the 1990s. As I subsequently discuss in more detail, this approach (best exemplified by the practices of such innovators as the Bank of England, the Bank of Canada, the Reserve Bank of New Zealand, and the Swedish Riksbank) is characterized not only by public commitment to an explicit target, but also by a commitment to explain the central bank's policy actions in terms of a systematic decisionmaking framework that is aimed at achieving this target. This has led to greatly improved communication with the public about the central bank's interpretation of current conditions and the outlook for the future, notably through the publication of detailed Inflation Reports. It has also involved fairly explicit discussion of the approach that they follow in deliberating about policy actions and, in some cases, even publication of the model or models used in producing the forecasts that play a central role in these deliberations. As a consequence, these banks in particular have found themselves in need of a clear theory of how they can best achieve their objectives and have played an important role in stimulating reflection on this problem.

It is true that the conceptual frameworks proposed by central banks to deal with their perceived need for a more systematic approach to policy were, until quite recently, largely developed without much guidance from the academic literature on monetary economics. Indeed, the central questions of practical interest for the conduct of policy-how should central banks decide about the appropriate level of overnight interest rates? how should monetary policy respond to the various types of unexpected disturbances that occur?-had in recent decades ceased to be considered suitable topics for academic study. Reasons for this included the trenchant critique of traditional methods of econometric-policy evaluation by Lucas (1976); the critique of the use of conventional methods of optimal control in the conduct of economic policy by Kydland and Prescott (1977); and the development of a new generation of quantitative models of business fluctuations ("real-business-cycle theory") with more rigorous microeconomic foundations, but which implied no relevance of monetary policy for economic welfare.

Nonetheless, recent developments, to be discussed in detail in this volume, have considerably changed this picture. The present study seeks to show that it is possible to use the tools of modern macroeconomic theory-intertemporal equilibrium modeling, taking full account of the endogeneity of private-sector expectations-to analyze optimal interest-rate setting in a way that takes the concerns of central bankers seriously, while simultaneously taking account of the "New Classical" critique of traditional policy-evaluation exercises. In this way, the basic elements are presented of a theory that can provide the groundwork for the kind of systematic approach to the conduct of monetary policy that many central banks are currently seeking to develop. In the present chapter, I review some of the key features of this theory, as preparation for the more systematic development that begins in Chapter 2.

1 The Importance of Price Stability

A notable feature of the new rule-based approaches to monetary policy is the increased emphasis given to a particular policy objective: maintaining a low and stable rate of inflation. This is most obvious in the case of countries with explicit inflation targets. But it also seems to characterize recent policy in the United States as well, where the past decade has seen unusual stability of the inflation rate and many econometric studies have found evidence of a stronger Fed reaction to inflation variations. (See further discussion of recent U.S. policy in Section 4.1.)

Yet the justification of such an emphasis from the standpoint of economic theory may not be obvious. Standard general-equilibrium models-and the earliest generation of quantitative equilibrium models of business fluctuations, the real-business-cycle models of the 1980s-indicate that the absolute level of prices should be irrelevant for the allocation of resources, which depends only on relative prices. Traditional Keynesian macroeconometric models, of course, imply otherwise: Variations in the growth rate of wages and prices are found to be associated with substantial variations in economic activity and employment. Yet the existence of such "Phillips-curve" relations has typically been held to imply that monetary policy should be used to achieve output or employment goals, rather than giving priority to price stability.

The present study argues instead for a different view of the proper goals of monetary policy. Its use to stabilize an appropriately defined price index is in fact an important end toward which efforts should be directed-at least to a first approximation, it should be the primary aim of monetary policy. But this is not, as proponents of inflation targeting sometimes argue, because variations in the rate of inflation have no real effects. Rather, it is exactly because instability of the general level of prices causes substantial real distortions-leading to inefficient variation both in aggregate employment and output and in the sectoral composition of economic activity-that price stability is important.

Moreover, the existence of predictable real effects of shifts in monetary policy need not imply that policy should be based primarily on a calculation of its effects on output or employment. For the efficient aggregate level and sectoral composition of real activity is likely to vary over time, as a result of real disturbances of a variety of types. The market mechanism performs a difficult computational task-much of the time, fairly accurately-in bringing about a time-varying allocation of resources that responds to these changes in production and consumption opportunities. Because of this, variation over time in employment and output relative to some smooth trend cannot in itself be taken to indicate a failure of proper market functioning. Instead, instability of the general level of prices is a good indicator of inefficiency in the real allocation of resources-at least when an appropriate price index is used-because a general tendency of prices to move in the same direction (either all rising relative to their past values or all falling) is both a cause and a symptom of systematic imbalances in resource allocation.

This general vision is in many respects an attempt to resurrect a view that was influential among monetary economists prior to the Keynesian revolution. It was perhaps best articulated by the noted Swedish economic theorist Knut Wicksell at the turn of the previous century, along with his followers in the "Stockholm school" of the interwar period (such as Erik Lindahl and Gunnar Myrdal) and others influenced by Wicksell's work, such as Friedrich Hayek. However, these authors developed their insights without the benefit of either modern general-equilibrium theory or macroeconometric modeling techniques, so that it may be doubted whether Wicksellian theory can provide a basis for the kind of quantitative policy analysis in which a modern central bank must engage-and which has become only more essential given current demands for public justification of policy decisions. This book seeks to provide theoretical foundations for the view just sketched that meet modern standards of conceptual rigor and are capable of elaboration in a form that can be fit to economic time series.

1.1 Toward a New "Neoclassical Synthesis"

The approach to monetary policy proposed here builds upon advances in the analysis of economic fluctuations and, in particular, of the monetary transmission mechanism over the past few years. The models analyzed in this volume differ in crucial respects from the first two generations of equilibrium business-cycle models, namely, the New Classical models that Lucas (1972) took as a starting point and the real-business-cycle (RBC) models pioneered by Kydland and Prescott (1982) and Long and Plosser (1983). Neither of these early illustrations of the possibility of rigorous intertemporal general-equilibrium analysis of short-run fluctuations contained elements that would make them suitable for the analysis of monetary policy. While the Lucas model allows for real effects of unexpected variations in monetary policy (modeled as stochastic variation in the growth rate of the money supply), it implies that any real effects of monetary policy must be purely transitory and that monetary disturbances should have no real effects to the extent that their influence on aggregate nominal expenditure can be forecast in advance. Yet, as shown Chapter 3, VAR evidence on the effects of identified monetary policy shocks is quite inconsistent with these predictions. Rather, these effects on aggregate nominal expenditure are forecastable at least 6 months in advance on the basis of federal funds rate movements, whereas the (similarly delayed) effects on real activity are substantial and persist for many quarters. Nor is this empirical failure of the model one of minor import for the analysis of monetary policy. The conclusion that only unanticipated monetary policy can have real effects leads fairly directly to the skeptical conclusions of Sargent and Wallace (1975) about the necessary ineffectiveness of any attempt to use monetary policy to stabilize real activity.

(Continues...)

Excerpted from Interest and Pricesby MICHAEL WOODFORD Copyright © 2003 by Princeton University Press. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Edition details

• Publisher: Princeton University Press
• Publication date: 2003
• Language: English
• ISBN 10: 0691010498
• ISBN 13: 9780691010496
• Binding: Hardcover
• Number of pages: 808