Price stability vs. output stability: tales of federal reserve administrations

OUTPUT AND PRICE STABILITY An International Comparison

The paper examines the behavior of output and prices for 10 ditTerent countries within the context of a rational expectations model with wage contracts. The model predicts that there is a policy tradeoff between output stability and price stability, and the estimated correlations and dynamic interactions are generally consistent with the model. For each of the countries the model is fit to the ...

Federal Stability in Unequal Societies

The stability of federal systems is a thorny issue. Several scholars have attempted to come to grips with this problem and have proposed mechanisms or institutions which may contribute to the stabilization of federal systems. In many instances, however, the underlying mechanisms and microfoundations are poorly specified. In this paper I build upon existing models dealing with decentralization a...

Achieving Price Stability

Why Price Stability ?

The Maastricht Treaty contains the following statutory mandate: “The primary objective of the ESCB shall to be to maintain price stability.“ But why attach such importance to price stability and what does “price stability” mean? The latter question contains an historical component, the former is of a theoretical nature. I will therefore deal with the “what” and the “why” of my theme in the foll...

Selling Federal Reserve Payment Services: One Price Fits All?

I n a large modern economy, there is a vast and constant movement of funds in the conduct of commerce and finance. The channels through which these funds move constitute the payment system, which, ultimately, forms a network connecting all participants in the economy. In dollar value, the bulk of this movement is not in cash but in the form of instructions for the crediting and debiting of acco...