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Working Paper

Thinking about Monetary Policy without Money: A Review of Three Books: Inflation Targeting, Monetary Theory and Policy, and Interest and Prices

This paper reviews three recent books. Two books, one by Carl Walsh and one by Michael Woodford, focus on the development of monetary theory. In contrast, the third book is a collection of papers in an NBER volume on inflation targeting. This volume outlines some of the issues that arise when applying the tools described by Walsh and Woodford to the policy goal of targeting inflation rates. A central theme of all three works is the desirability of abstracting from money demand in the analysis of monetary policy. In our review we focus the bulk of our discussion on the absence of money in these models.

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.


Suggested Citation

Carlstrom, Charles T., and Timothy S. Fuerst. 2004. “Thinking about Monetary Policy without Money: A Review of Three Books: Inflation Targeting, Monetary Theory and Policy, and Interest and Prices.” Federal Reserve Bank of Cleveland, Working Paper No. 04-10. https://doi.org/10.26509/frbc-wp-200410