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Corporate Bond Yield Spreads in Recent Decades
Christopher Mills
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Stephen G. Cecchetti:
Monetary Policy in a Low Inflation Environment
Robert Eisenbeis,
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Rajeev Dhawan:
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Monetary Policy in a
Low Inflation
Environment
Thinking About Unconventional Monetary Tools
 By Stephen G. Cecchetti
Stephen G. Cecchetti is a professor
of international economics
and finance at the International
Business School, Brandeis
University, a research associate
of the National Bureau of
Economic Research, and a consultant
to the European Central
Bank’s Inflation Persistence
Project. Previously, he was a
professor of economics at Ohio State University and the
director of research at the Federal Reserve Bank of New
York. He has also served as a visiting professor at several
institutions and has served on several editorial boards of
scholarly publications. He has published over fifty articles
in academic and policy journals and is a regular contributor
to the Financial Times. He received a S.B. in
Economics from M.I.T. and a Ph.D. in Economics from
the University of California at Berkeley.
The constraint of a zero nominal interest rate requires
rethinking how to use monetary policy to stimulate the
economy in low-inflation conditions. Central banks are
not only the economy’s stabilizers, they are also its risk
managers. How do they perform both functions? One
issue is how to define an inflation target. Another is how
to protect the economy from a deflationary shock. As a
risk manager, the Fed has thought through its options
and has a number of tools at its disposal. Clearer and
timelier communication of objectives and actions would
also help to make monetary policy more effective.
Comments prepared for the National Association for Business Economics Annual Meeting, September 15, 2003.
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