The authors estimate common and nation-specific components of technology shocks, real demand shocks, and combined (common and nation-specific) monetary shocks using quarterly data for Korea and the United States.
The idea of monetary policy aimed at producing a stable price level has gained increasing support in the United States in recent years. In 1991, the Neal Resolution proposed to make such a policy objective law.
The authors argue that a monetary policy of zero inflation would benefit society by eliminating price distortion, increasing economic growth, adding liquidity to the economy, and reducing uncertainty associated with price-level drift.
