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Espinosa-Vega, Marco
Russell, Steven
Year of Publication: 
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2001-20
In this paper the authors study the stability properties of the alternative steady-state equilibria that arise in a neoclassical production model that delivers pleasant monetarist arithmetic. They show that if the government’s monetary policy rule involves a fixed money supply growth rate, then "pleasant arithmetic" steady states—steady states from which a permanent increase in the money growth and inflation rates is associated with a permanent decrease in the real interest rate and a permanent increase in the level of output—are dynamically stable.
Econometric models
Monetary policy
Document Type: 
Working Paper

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