This paper demonstrates a mechanism whereby rules can be extracted from a feedforward neural network trained to characterize the money­ price relationship, defined as the relationship between the rate of growth of the money supply and inflation. Monthly Divisia component data is encoded and used to train a group of candidate connectionist architectures. One candidate is selected for rule extrac...

In a discretionary regime the monetary authority can print more money and create more inflation than people expect. But, although these inflation surprises can have some benefits, they cannot arise systematically in equilibrium when people understand the policymaker’s incentives and form their expeziations accordingly. Because the policymaker has the power to create inflation shocks ex pest, th...

There is no evidence that previous studies, available to Iran’s inflation literature, have used spectral methodology to analyze a possible relationship between inflation and its main determinants within a specific period. Accordingly, the present study investigates the effects of money growth, real output growth, output gap and interest rate changes on inflation at low and high frequencies...

This paper assesses the relative effectiveness of central bank independence vs. policy rules for the policy instruments in bringing about good economic performance. It examines historical changes in (1) macroeconomic performance, (2) the adherence to rulesbased monetary policy, and (3) the degree of central bank independence. Macroeconomic performance is defined in terms of both price stability...

A general-equilibrium shopping-time model ofmoney demand is used to obtain estimates ofsome dynamic costs ofinflation under alternative monetary policy rules. After examining the welfare implications ofsteady-state inflation, dynamic welfare costs are evaluated for inflation-targeting and price-level targeting regimes in a stochastic setting in which agents are uncertain about the underlying in...

We evaluate the effect of the establishment of modern state institutions (e.g. a central bank or a constitution) on the risk premium associated with government debt traded abroad. Drawing on evidence from one of the most dramatic reform periods in modern history, and using data on sovereign debt traded in London between 1870 and 1914, we investigate the impact of major reforms on the yields of ...

I am extremely grateful to Amit Kara and Ed Nelson for assistance and useful discussions in the course of the preparation of this paper. I also thank Jagjit Chadha for useful comments on a previous draft. The views expressed here are personal and should not be interpreted as those of the Bank of England or other members of the Monetary Policy Committee.

In this study, Black, Macklem, and Rose thoroughly describe the outcomes when a wide range of reaction functions are set in CPAM, the Canadian Policy Analysis Model developed at the Bank of Canada. The reaction functions for monetary policy influence the short-term interest rate relative to the long-term rate. The analysis begins with the CPAM reaction function, which targets the expected diffe...