Monetary Policy
By minimizing the harm caused by recessions and high inflations, monetary policy can promote economic stability and create an environment in which individuals and businesses prosper and thrive. In pursuit of these goals, Mercatus research shows why and how the Federal Reserve should (a) follow a rules-based approach to making policy, (b) increase its transparency and accountability to the public, and (c) better utilize market signals.
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Latest work in Monetary Policy
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Peter Conti-Brown on the Fed under Trump 2.0, Reforming the Discount Window, and Providential Moments
Could we all use a little more faith?
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
David Bahnsen on the Incoming Trump Administration and the Financialization of the US Economy
Are we kicking too many cans down the road?
- | Monetary Policy Monetary Policy
- | Expert Commentary Expert Commentary
Things Are Looking Up for Argentina | City Journal
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Macro Musings 2024 Retrospective
Who is in David’s starting five of macro economists?
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
George Selgin on Strategic Bitcoin Reserves, Debanking, and the Fed’s Framework Review
Despite popular belief, building a strategic Bitcoin reserve is unlikely to strengthen the dollar or enhance its role as the world’s reserve currency.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Joey Politano on the AI Investment Boom and Trends in Economic Growth
While the recent surge in AI investment presents an opportunity to supercharge economic growth, the ongoing geopolitical battle with China remains a crucial obstacle to overcome.
- | Monetary Policy Monetary Policy
- | TV Appearance TV Appearance
Consumer Impact: Breaking Down the Latest US Inflation Numbers | Global Catholic Television Network’s News Nightly
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
An Effective Monetary Policy with Nominal GDP Level Targeting
The Federal Reserve should consider adopting a policy of nominal GDP level targeting, which is the best way to stabilize the labor market and the financial system while maintaining an average inflation rate of close to 2 percent
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Post-pandemic Inflation and Improving FAIT with Nominal GDP Level Targeting
Flexible average inflation targeting can be improved by dropping its asymmetry so that it is implemented as a form of nominal GDP level targeting
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Financial Stability and Nominal GDP Targeting
NGDP targeting is simpler, more intuitive, and more robust than the current monetary policy strategy
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
A Rule-Based Monetary Policy
Monetary policy remains a contentious topic, but historical evidence, particularly from the Volcker–Greenspan era, suggests that the rule-based approach would offer greater predictability, stability, transparency, and consistency in Fed policy
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
A Critique of Lars Svensson’s Arguments Against NGDP Targeting
Lars Svensson’s conclusion that nominal GDP targeting (NGDPT) is inferior to average inflation targeting rested upon several subtle fallacies, so the Fed should use its current framework review to reconsider NGDPT
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Targeting Nominal GDP Through Monetary Control
Instead of using flexible average inflation targeting (FAIT) to control inflation, the Federal Reserve should shift its strategy to target the nation’s economic growth rate, measured as nominal (not adjusted for inflation) GDP
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Jeffrey Lacker on the History of Fed Credit Policy and the Four Doctrines of Fed Lending
It’s crucial to understand the history of credit policy at the Fed in order to effectively improve the system moving forward.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Zachary Mazlish on the Political Implications of Inflation and the Impact of Transformative AI
Assessing the outcome of the 2024 presidential election, it is clear that inflation remains the most significant driver of national voting patterns.
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
The Fed’s 2024–25 Framework Review: Optimizing the Dual Mandate Through Nominal GDP Level Targeting
As the Federal Reserve considers how to implement its dual mandate of price stability and maximum employment, it should adopt—or approach—nominal GDP level targeting as a benchmark framework.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Ellen Correia Golay on the Keys to Improving Treasury Market Resiliency
Over the past year, the Treasury Department has taken numerous crucial steps to enhance the resiliency and liquidity of the Treasury market.
- | Monetary Policy Monetary Policy
- | Working Papers Working Papers
A New Measure of the Stance of Eurozone Monetary Policy
The NGDP gap can help policymakers assess whether current policy is on track
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Emil Verner on Banking Crises, Credit Booms, and the Rise of Populism
In order to prevent future financial crises, it is crucial to understand the causes of bank failures, and in particular, the deterioration of bank fundamentals.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Loretta Mester on How to Improve the Fed’s Operating Framework
If the Fed were to review its operating system, it could consider transitioning from an ample-reserves framework to a tiered-reserves framework as a way to improve financial stability and minimize its financial footprint.
Latest work in Monetary Policy
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Peter Conti-Brown on the Fed under Trump 2.0, Reforming the Discount Window, and Providential Moments
Could we all use a little more faith?
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
David Bahnsen on the Incoming Trump Administration and the Financialization of the US Economy
Are we kicking too many cans down the road?
- | Monetary Policy Monetary Policy
- | Expert Commentary Expert Commentary
Things Are Looking Up for Argentina | City Journal
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Macro Musings 2024 Retrospective
Who is in David’s starting five of macro economists?
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
George Selgin on Strategic Bitcoin Reserves, Debanking, and the Fed’s Framework Review
Despite popular belief, building a strategic Bitcoin reserve is unlikely to strengthen the dollar or enhance its role as the world’s reserve currency.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Joey Politano on the AI Investment Boom and Trends in Economic Growth
While the recent surge in AI investment presents an opportunity to supercharge economic growth, the ongoing geopolitical battle with China remains a crucial obstacle to overcome.
- | Monetary Policy Monetary Policy
- | TV Appearance TV Appearance
Consumer Impact: Breaking Down the Latest US Inflation Numbers | Global Catholic Television Network’s News Nightly
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
An Effective Monetary Policy with Nominal GDP Level Targeting
The Federal Reserve should consider adopting a policy of nominal GDP level targeting, which is the best way to stabilize the labor market and the financial system while maintaining an average inflation rate of close to 2 percent
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Post-pandemic Inflation and Improving FAIT with Nominal GDP Level Targeting
Flexible average inflation targeting can be improved by dropping its asymmetry so that it is implemented as a form of nominal GDP level targeting
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Financial Stability and Nominal GDP Targeting
NGDP targeting is simpler, more intuitive, and more robust than the current monetary policy strategy
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
A Rule-Based Monetary Policy
Monetary policy remains a contentious topic, but historical evidence, particularly from the Volcker–Greenspan era, suggests that the rule-based approach would offer greater predictability, stability, transparency, and consistency in Fed policy
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
A Critique of Lars Svensson’s Arguments Against NGDP Targeting
Lars Svensson’s conclusion that nominal GDP targeting (NGDPT) is inferior to average inflation targeting rested upon several subtle fallacies, so the Fed should use its current framework review to reconsider NGDPT
- | Federal Reserve Framework Review Federal Reserve Framework Review
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
Targeting Nominal GDP Through Monetary Control
Instead of using flexible average inflation targeting (FAIT) to control inflation, the Federal Reserve should shift its strategy to target the nation’s economic growth rate, measured as nominal (not adjusted for inflation) GDP
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Jeffrey Lacker on the History of Fed Credit Policy and the Four Doctrines of Fed Lending
It’s crucial to understand the history of credit policy at the Fed in order to effectively improve the system moving forward.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Zachary Mazlish on the Political Implications of Inflation and the Impact of Transformative AI
Assessing the outcome of the 2024 presidential election, it is clear that inflation remains the most significant driver of national voting patterns.
- | Monetary Policy Monetary Policy
- | Policy Briefs Policy Briefs
The Fed’s 2024–25 Framework Review: Optimizing the Dual Mandate Through Nominal GDP Level Targeting
As the Federal Reserve considers how to implement its dual mandate of price stability and maximum employment, it should adopt—or approach—nominal GDP level targeting as a benchmark framework.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Ellen Correia Golay on the Keys to Improving Treasury Market Resiliency
Over the past year, the Treasury Department has taken numerous crucial steps to enhance the resiliency and liquidity of the Treasury market.
- | Monetary Policy Monetary Policy
- | Working Papers Working Papers
A New Measure of the Stance of Eurozone Monetary Policy
The NGDP gap can help policymakers assess whether current policy is on track
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Emil Verner on Banking Crises, Credit Booms, and the Rise of Populism
In order to prevent future financial crises, it is crucial to understand the causes of bank failures, and in particular, the deterioration of bank fundamentals.
- | Monetary Policy Monetary Policy
- | Mercatus Original Podcasts Mercatus Original Podcasts
- | Macro Musings Macro Musings
Loretta Mester on How to Improve the Fed’s Operating Framework
If the Fed were to review its operating system, it could consider transitioning from an ample-reserves framework to a tiered-reserves framework as a way to improve financial stability and minimize its financial footprint.