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- Title
Optimal Choice of a Proximate Monetary Target in an Open Economy.
- Authors
Campbell, R.B.
- Abstract
This paper investigates the implications of hitting a monetary target (rate of interest or money supply) in an open economy. The technique of linear optimal control is applied to a small open economy of the Australian economy. A feature of the model is the interrelationship between the monetary policy. Four optimal control experiments are reported in detail. The results indicate that we should aim for a money-supply target rather than an interest-rate target and that some assistance from fiscal policy should be provided to monetary policy in order to achieve this target.
- Subjects
AUSTRALIA; MONEY supply; INTEREST rates
- Publication
Economic Record, 1979, Vol 55, Issue 148, p47
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/j.1475-4932.1979.tb02201.x