Discretion and the Transmission Lags of Monetary Policy

U Rules and Discretion in Monetary Policy

HOULD MONETARY POLICY be determined by a legislated rule or by a monetary authority’s discretion? Henry Simons (1936) first raised this issue as a choice between rules and authorities, terms little different than those used in recent discussions. He stresses the value of a rule, such as a law, instead of reliance on an authority’s discretion because “definite, stable, legislative rules of the g...

Output Composition of Monetary Policy Transmission

This paper aims to investigate the role of each aggregate spending component in the monetary policy transmission in Indonesia. It assesses the relative strength of the role of each spending component in the monetary policy transmission. In so doing, this study employs the contribution analysis, which is calculated based on the cumulative impulse response of each component of GDP to a monetary p...

Commitment Versus Discretion in Monetary Policy

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. hether policymakers should commit to a certain course of action or have the flexibility to approach each situation as it arises continues to be a central question in the design of monetary policy. A seminal article written by two...

Monetary Transmission Lags and the Formulation of the Policy Decision on Interest Rates

Rules and Discretion in the Conduct of Monetary Policy