New study reveals best monetary policy for economic stability in crises.
The article explores how different types of economic shocks affect the best choice of monetary policy. By simulating changes in the speed of money circulation and government spending, the researchers compared different policy rules. They found that targeting the amount of money in circulation works well during government spending shocks, while adjusting interest rates is better during changes in money speed. These rules can even work better than letting policymakers make decisions on their own in certain situations.