A Monetary Impulse Measure for Medium-Term Policy Analysis

Author/Editor:

Bennett T. McCallum ; Monica Hargraves

Publication Date:

December 1, 1994

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper presents a measure of monetary impulse that is intended to reflect the medium-term inflationary implications of a nation’s current monetary policy. The measure consists of the growth rate of the monetary base, adjusted for reserve requirement changes and augmented by an implicit forecast of future growth rates of base velocity. Time series plots of the impulse measure for the G-7 countries are presented, and are compared with plots of inflation and of two alternative monetary indicators—the yield curve slope and the growth rate of a broad monetary aggregate. The impulse measure serves well as a medium-term indicator of future inflation, and on balance matches or outperforms the alternative indicators.

Series:

Working Paper No. 94/146

Subject:

English

Publication Date:

December 1, 1994

ISBN/ISSN:

9781451856583/1018-5941

Stock No:

WPIEA1461994

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

34

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