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McCallum Rule/McCallum: McCallum proposes (1) to facilitate monetarist monetary policy by investing money supply control more indirectly than in the case of the Taylor Rule (see Taylor Rule/Taylor).
The central bank is to align the monetary base with the longer-term development path of the nominal domestic product.
McCallumVsTaylor: the direct control of money supply by the Taylor rule means that monetary policy makers must make explicit statements about the price and volume components.
Solution/McCallum: The very long-term orientation (more than 20 years) also ensures that the development path is independent of monetary development. (2)
The averages are calculated over a rolling period of 4 years to prevent the monetary base from reacting to cyclical fluctuations in circulation speed. In contrast to the original Taylor Rule, the McCallum Rule is based exclusively on data from the previous period or on long-term average values. The problem of real-time data in identifying the need for adaptation therefore does not occur.
VsMcCallum: this volume-oriented concept consciously accepts greater interest rate fluctuations.
1. McCallum, Bennett T., The case for rules in the conduct of monetary policy: A concrete example. Review of World Economics 123, (3), 1987, S. 415– 429.
2. Ibid._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
The case for rules in the conduct of monetary policy: A concrete example 1987
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