The lags in monetary policy. An assessment of alternative approaches

Abstract

Fiscal and monetary policy discussions in the early post-Keynesian literature were largely conducted against a background of an unlagged system. The main interest of writers at the time was in assessing the size of the response in the implementation of a variety of policy instruments and little attention was paid to the relationship between the timing of policy actions and the lag structure operative in particular economies. More recently, however, a number of questions have been raised regarding the possibility that monetary-fiscal instruments may on account of these lags prove to be destabilising. The present paper is concerned with lags in monetary policy alone, outlining four different possible approaches to the lag problem.

JEL: E52