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- Title
A Feasible and Objective Concept of Optimal Monetary Policy: The Quadratic Loss Function in the Postwar Period.
- Authors
Duarte, Pedro Garcia
- Abstract
This article discusses the relationship between monetarist approaches to fiscal policy that rely on the quadratic loss function and the optimalization of economic conditions in the U.S. during the 1960s and 1970s. The author investigates the changes made to the quadratic loss function as it became an integral tool in monetary economics. Economists Milton Friedman, Hebert Simon and Franco Modigliani worked with this theory. The role of statistical methods of analysis drawn from the U.S. Office of Naval Research, and other centers of academic policy planning and management science are considered as factors informing the development of the the quadratic loss function in monetary policy.
- Subjects
UNITED States; MONETARY policy -- History; MONETARY policy; MATHEMATICAL models of monetary policy; QUADRATIC equations; FRIEDMAN, Milton, 1912-2006; POOLE, William, 1937-
- Publication
History of Political Economy, 2009, Vol 41, Issue 1, p1
- ISSN
0018-2702
- Publication type
Article
- DOI
10.1215/00182702-2008-036