Federal Reserve System

About: Federal Reserve System is a other organization based out in Washington D.C., District of Columbia, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 2373 authors who have published 10301 publications receiving 511979 citations.

Chapter 8 The demand for money

Abstract: Publisher Summary The relation between the demand for money balances and its determinants is a fundamental building block in most theories of macroeconomic behavior. The demand for money is a critical component in the formulation of monetary policy, and a stable demand function for money has long been perceived as a prerequisite for the use of monetary aggregates in the conduct of policy. The repeated breakdown of existing empirical models in the face of newly emerging data has fostered a vast industry devoted to examining and improving the demand for money function. This process has been aided by a growing arsenal of econometric techniques that has permitted more sophisticated examinations of dynamics, functional forms, and expectations. These techniques have also provided researchers with a wide variety of diagnostic tests to evaluate the adequacy of particular specifications. The chapter reviews underlying theoretical models to re-examine measurement and specification issues such as the definition of money and the appropriate scale and opportunity cost variables. It discusses the estimation issues, criticisms, and modifications in the partial adjustment model.

Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy

Abstract: This paper illustrates the technique of generational accounting, a new way to evaluate fiscal policy that overcomes the inherent ambiguities of traditional deficit accounting. The authors illustrate why there is no 'correct' measure of the deficit and how generational accounting--estimating the fiscal burdens current policy places on different generations--provides a clearer picture of the intergenerational and macroeconomic effects of fiscal policy than any measure of the deficit. Their calculations suggest that, despite recent changes, U.S. fiscal policy is unsustainable in that it will ultimately require future generations to bear a much higher burden than those currently alive.