Comments on ‘Money Supply, Interest Rate and Exchange Rate Targets: Conflicting Issues in an Open Economy’ by Rüdiger Pohl

  • M. J. Artis


Rüdiger Pohl’s contribution is a competent addition to a line of literature, which is now quite lengthy, in which policy evaluation is conducted according to the ‘robustness’ criterion: that is to say, following Poole’s classic paper (Poole, 1970, extended for the open economy by Parkin (1978)), a policy is analysed for its characteristics in the face of unexpected shocks. Studies of this type predictably show that the results are model-dependent and preference function-specific. Moreover, to be useful as practical advice, some priors on the distribution of shocks need to be invoked. Over time, the ‘menu’ of policies to be analysed in this way has expanded, reflecting in part the disillusioning experience of monetary targets and a corresponding interest in alternatives, in rough chronological order those of targeting the exchange rate, nominal income and the price level.


Exchange Rate Monetary Policy Open Economy Price Level Real Exchange Rate 
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  1. Bean, C. R. (1983) ‘Targeting nominal income: an appraisal’, Economic Journal, vol. 93, December.Google Scholar
  2. Parkin, M. J. (1978) ‘A comparison of alternative techniques of monetary control under rational expectations’, Manchester School.Google Scholar
  3. Poole, W. (1970) ‘Optimal choice of monetary policy instruments in a simple stochastic macro model’. Quarterly Journal of Economics.Google Scholar

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© Stephen F. Frowen 1993

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  • M. J. Artis

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