Skip to main content
Review logo

Our most academic publication offers research and surveys on monetary policy, national and international developments, banking, and more. The content is written for an economically informed readership—from the undergraduate student to the PhD.


Vol. 87, No. 5 (Posted 2005-09-01)

The Monetary Instrument Matters

by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko

This paper revisits the debate of the money supply versus the interest rate as the instrument of monetary policy. The authors use a dynamic stochastic general equilibrium framework to examine the effects of alternative monetary policy rules on inflation persistence, the information content of monetary data, and real variables; they show that inflation persistence and the variability of inflation relative to money growth depend on whether the central bank follows a money growth rule or an interest rate rule.

Cite this article





Subscribe to our newsletter


Follow us

Twitter logo Google Plus logo Facebook logo YouTube logo LinkedIn logo
Back to Top