Institution(s): School of Economics and Finance, Hong Kong Institute of Monetary Research

Date: Jun 17, 2002 (Monday)

Time: 05:30 pm - 06:30 pm

Venue: Rayson Huang Theatre, The University of Hong Kong

Fee: Free of charge

Inquiries: Ms. Mabel Woo (852) 2859 2192 or email mable@econ.hku.hk

Abstract:

Prof. Michael Woodford is Harold H. Helm ’20 Professor of Economics and Banking at Princeton University, a Fellow of the Econometric Society, and a Research Associate of the National Bureau of Economic Research. He is an expert in monetary theory and policy. In addition to his numerous original contributions to monetary and macroeconomics, he has co-edited the 3-volume Handbook of Macroeconomics (North-Holland, 1999) with John Taylor of Stanford University and the US Treasury. Currently, he is finishing a book entitled Interest and Prices: Foundations of Monetary Policy Analysis, which promises to be another classic in monetary theory paralleling that of Knut Wicksell.

This lecture explores the impact of improvements in private-sector information-processing capabilities on the effectiveness of monetary policy. It first considers the consequences of improved information about central-bank actions, and argues that the management of expectations will become even more important to effective monetary policy. It next considers the consequences of the potential erosion of private-sector demand for central-bank money. This should not fundamentally impair the ability of central banks to achieve their stabilization objectives, though it may require a new approach to the implementation of monetary policy. The advantages of using central-bank standing facilities as the main tool to control overnight interest rates will also be discussed.