Fed reviews use of monetary aggregates in policymaking
A Federal Reserve paper published on Thursday makes a case for including measures of money aggregates in policy analysis and interest rate setting.
Bennett McCallum and Edward Nelson, the paper's authors, use a new Keynesian model with time series data to examine whether there is a relationship between money growth and inflation
McCallum and Nelson find that while financial innovation can obscure the relationship between monetary growth and inflation, a positive relationship does emerge. The
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