Helmut Wagner University of Hagen, Feithstr. 140, D - 58084 Hagen In the last few years decisive methodological and thematic focal points which are important for practical economic policy have been developed in the theory of monetary and exchange rate policy. This book is concerned with these developments, their assessment and the open questions which have still not been solved. It is divided into four parts. The first part deals with central bank design, the second with strategies of monetary policies and their implementation. Part III is concerned with theoretical aspects of exchange rate policy and monetary union, and part IV with selected issues of monetary and exchange rate policy in developing and transition countries. In the following pages I will provide an 1 overview of the individual articles With the exception of the article by Nobel . Laureate James Tobin, the contributions contained in this book were all introduced and discussed at an academic symposium I organized in Castrop Rauxel on 8 and 9 September 1997. James Tobin agreed spontaneously to my suggestion that he should write a comprehensive article especially for this publication. A short summary of the comments or supplementary papers and of the general discussions will be given in the last section of this book, titled "Conclusion and Supplements". There I will also provide some supplements respecting the issues which were the subject of the greatest amount of debate at the symposium.

Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.

The first twenty years of the European Central Bank offer a unique insight into how a central bank can navigate macroeconomic insecurity and crisis. This volume examines the structures and decision-making processes behind the complex measures taken by the ECB to tackle some of the toughest economic challenges in the history of modern Europe.

An overview of recent theoretical and policy-related developments in monetary economics.

Since the Bank of England was made independent in 1997, the conduct of monetary policy has been relatively uncontroversial. The debates between Keyneisans, monetarists and supporters of fixed exchange rate mechanisms now appear very distant. Despite the apparent consensus there are many issues related to the conduct of monetary policy that are not yet settled and which will soon come to the fore. Is the current form of independence for the Bank of England appropriate? Should a central bank target inflation or the prices level? How does a central bank deal with asset price deflation? Should more account be taken of monetary aggregates? Should central banks target asset prices? What is the relationship between the money supply and asset price inflation? How should central banks ensure financial stability? The IEA was at the forefront of changing the parameters of the debate surrounding monetary policy in the 1970s and 1980s. This text, brings together some of the leading authors in the field, including the current Governor of the Bank of England, to discuss current issues in monetary policy and the relationship between monetary policy and financial markets. It is appropriate for undergraduates and postgraduates in economics and finance as well as for practitioners in financial markets.

This book brings together leading academics and researchers to make a timely contribution to our understanding of the key issues in the fast-developing field of monetary economics. It offers a thoroughly comprehensive and up-to-date treatment of major areas such as money supply and demand, interest rate determination, international transmission of inflation, public debt, stabilization of the economy, the rational expectations hypothesis and the relationship between money and economic development. The book will be essential reading for all undergraduate and graduate students of monetary economics and macroeconomic theory. Contents: Preface; Contributors; Introduction: Taradas Bandyopadhyay and Subrata Ghatak; Money demand and supply, M.J. Artis and M.K. Lewis; Money market operations of the Bank of England and the determination of interest rates, David T. Llewellyn; Real interest rates and the role of expectations, Kajal Lahiri and Mark Zaporowski; Public sector deficits and the money supply, P.M. Jackson; The international transmission of inflation, George Zis; A critique of monetary theories of the balance of payments; nihil ex nihilo, M.H.L. Burstein; A framework for the analysis of two-tier exchange markets with incomplete segmentation, Jagdeep S. Bhandari and Bernard Decaluwe; Rational expectations and monetary policy, Patrick Minford; Monetary policy and credibility, Paul Levine; Disinflation and wage-price controls, David A. Wilton; Monetary growth models: The role of money demand functions, Taradas Bandyopadhyay and Subrata Ghatak; Index.

The paper considers the merits of rules and discretion for monetary policy when the structure of the macroeconomic model and the probability distributions of disturbances are not well defined. It is argued that when it is costly to delay policy reactions to seldom-experienced shocks until formal algorithmic learning has been accomplished, and when time consistency problems are significant, a mixed strategy that combines a simple verifiable rule with discretion is attractive. The paper also discusses mechanisms for mitigating credibility problems and emphasizes that arguments against various types of simple rules lose their force under a mixed strategy.