#2009-049A "Taylor-Type Rules and Permanent Shifts in Productivity Growth"
by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko
September 2009

This paper examines the impact of a permanent shock to the productivity growth rate in a New Keynesian model when the central bank does not immediately adjust its policy rule to that shock. More...

#2006-054B "Forecasting Inflation and Output: Comparing Data-Rich Models with Simple Rules"
by William T. Gavin, and Kevin L. Kliesen
September 2006
Revised May 2008

Decision makers, both public and private, use forecasts of economic growth and inflation to make plans and implement policies. In many situations, reasonably good forecasts can be made with simple rules of thumb that are extrapolations of a single data series. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, May/June 2008, 90(3, Part 1), pp. 175-92

#2006-035C "Inflation Risk and Optimal Monetary Policy"
by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko
May 2006
Revised December 2007

This paper shows that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk. More...

PUBLISHED: Macroeconomic Dynamics, May 2009, 13(Supp. 1), pp. 58-75

#2005-062C "Recent Developments in Monetary Macroeconomics and U.S. Dollar Policy"
by William T. Gavin
September 2005
Revised July 2007

This paper summarizes recent developments in the theory and practice of monetary policy in a closed economy and explains what these developments mean for United States dollar policy. More...

PUBLISHED: ICFAI Journal of Monetary Economics, August 2007, V(3), pp. 49-56

#2004-034C "Using Extraneous Information to Analyze Monetary Policy in Transition Economies"
by William T. Gavin, and David M. Kemme
December 2004
Revised October 2007

Empirical macroeconomics is plagued by small sample size and large idiosyncratic variation. This problem is especially severe in the case of the transition economies. More...

PUBLISHED: Journal of International Money and Finance, September 2009, 28(5), pp. 868-79

#2004-026B "The Monetary Instrument Matters"
by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko
November 2004
Revised March 2005

This paper revisits the issue of money growth versus the interest rate as the instrument of monetary policy. Using a dynamic stochastic general equilibrium framework, we examine the effects of alternative monetary policy rules on inflation persistence, the information content of monetary data, and real variables. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, September/October 2005, 87(5), pp. 633-58

#2004-017D "Monetary Policy, Taxes, and the Business Cycle"
by William T. Gavin, Finn E. Kydland, and Michael R. Pakko
August 2004
Revised May 2006

This paper analyzes the interaction of inflation with the tax code and its contribution to aggregate fluctuations. We find significant effects operating through the tax on realized nominal capital gains. More...

PUBLISHED: Journal of Monetary Economics, September 2007, 54(6), pp. 1587-1611

#2004-007B "Inflation-Targeting, Price-Path Targeting and Indeterminacy"
by Robert Dittmar, and William T. Gavin
March 2004
Revised December 2004

In this paper, we examine the areas of indeterminacy in a flexible price RBC model with shopping time role for money and a central bank that uses an interest rate rule to target inflation and/or the price level. We present analytical results showing that, although inflation targeting often results in real indeterminacy, a price level target generally delivers a unique equilibrium for a relevant range of policy parameters. More...

PUBLISHED: Economics Letters, September 2005, 88(3), pp. 336-42

#2003-045B "A Common Model Approach to Macroeconomics: Using Panel Data to Reduce Sampling Error"
by William T. Gavin, and Athena T. Theodorou
December 2003
Revised June 2004

Is there a common model inherent in macroeconomic data? Macroeconomic theory suggests that market economies of various nations should share many similar dynamic patterns; as a result, individual-country empirical models, for a wide variety of countries often include the same variables. More...

PUBLISHED: Journal of Forecasting, April 2005, 24(3), pp. 203-19

#2003-027B "Inflation Targeting: Why It Works and How To Make It Work Better"
by William T. Gavin
September 2003
Revised September 2003

Inflation targeting has worked so well because it leads policymakers to debate, decide on, and communicate the inflation objective. In practice, this process has led the public to believe that the central bank has a long-term inflation objective. More...

PUBLISHED: Business Economics, April 2004, 39(2), pp. 30-37