“The Lag in Effect of Monetary Policy”
“First, discretionary policy at times tends to be dominated by goals other than, and even contradictory to, stabilization (for example, pegging bonds yields, halting gold outflows), whereas the automatic framework cannot be so readily exploited for other purposes. Second, the inertia and the political considerations referred to above that inhibit the ready reversal of discretionary policies when they turn out to be in the wrong direction make for a longer lag than would otherwise exist between the recognition of the need for action and the taking of action and introduce much higher serial correlation into perverse discretionary actions than into perverse automatic reactions.” Read more.
“The Lag in Effect of Monetary Policy”
Milton Friedman
The Journal of Political Economy, Vol. 69, No. 5 (Oct. 1961), pp. 447-466
Image by graur razvan ionut / FreeDigitalPhotos.net.
