[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-324730-105":59,"doc-detail-324730-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","a-price-objective-for-monetary-policy-price-stability-as-a-long-run-objective-of-monetary-policy","A Price Objective for Monetary Policy - Price stability as a long-run objective of monetary policy","","Price stability as a long-run objective of monetary policy has gained support in the United States and abroad, including proposals such as the 1991 Neal Resolution and explicit inflation or price-stability commitments in other countries. The text explains why achieving price stability is difficult, focusing on monetary targeting and the lack of an explicit long-term price-level commitment. It analyzes uncertainty created by annual M2 targeting ranges and discusses velocity uncertainty, arguing for long-run paths and a price-level objective as benchmarks.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/a-price-objective-for-monetary-policy-price-stability-as-a-long-run-objective-of-monetary-policy/324730/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/a-price-objective-for-monetary-policy-price-stability-as-a-long-run-objective-of-monetary-policy/324730.png","ImageObject",300,407,{"name":92,"@type":93},"Levi","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-04","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",17,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why does the text argue that price stability is difficult to achieve?","Question",{"text":113,"@type":114},"It emphasizes uncertainty created by monetary targeting, especially broad M2 target ranges and the way annual targets are built on the previous year's fourth-quarter averages rather than a midpoint plan.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How does current M2 targeting practice increase uncertainty about future money stock?",{"text":118,"@type":114},"Because target misses are effectively forgiven, M2 can become highly unpredictable over long horizons, producing a widening range of possible outcomes for M2 and prices.",{"name":120,"@type":111,"acceptedAnswer":121},"What does the document propose to reduce uncertainty in achieving price stability?",{"text":122,"@type":114},"It suggests specifying a multiyear path for M2, while also noting the need to hedge risks from unstable velocity by framing annual M2 targets within a multiyear price-level path.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},324730,1790013324,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},7971461740909,"https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d","by William T.Gavin and Alan C.Stockman  \nTne idea of monetarypolicy aimed aproducing a stable price level has gainedincreasing support in the United Statesin recent years.In 1991,the Neal Resolu-tion proposed to make such a policy ob-jective law.Elsewhere,the notion ofprice stability has also become morepopular.For example,the central banksof Canada and New Zealand recentlyadopted explicit multiyear targets for in-flation,and a commitment to price stabil-ity is widely thought to be a necessarycondition for successful monetary unionin the European Community.  \nDuring the past decade,inflation has beenreducedsignificantly,and many observersbelieve that further moderation may be instore in the next several years.Neverthe-less,price stability remains an elusivegoal both here and abroad.'ThisEconomic Commentary discussessome of the reasons why price stabilityis so difficult to achieve.One explana-tion lies in the nature of monetary tar-geting.Another is simply the absenceof an expicit commitment to a long-term objective for the price level.  \n■ The M2 Target  \nThe Federal Reserve System was createdin 1913 under the umbrella of a gold stan-dard.Our currency was fully converibleinto gold until 1933,and indeed,somevestiges of convertibility lingered on un-til 1971.But since 1971,the monetarystandard has had no anchor other than theannual monetary targets.  \nThe wide ranges assigned to the tar-geted aggregates and uncertainty aboutthe income velocity of money havemade the monetary targeting exercise  \n# A Price Objective for Monetary Policy\n\nproblematic as a vehicle for achievingprice stability.The uncertainty inducedby the broad ranges is compounded bythe practice of building the annualmonetary targets on the previous year'sactual fourth-quarter average of themoney stock(assumed here to be M2)rather than on the midpoint of that year'starget.?This procedure means that tar-get misses are forgiven;consequently,thelevel of M2 will be highly unpredictableover long horizons.  \nTo illustrate how the current practicecauses uncertainty about the futuremoney stock,consider that the M2 tar-get range for 1992 is four percentagepoints wide(2.5 percent to 6.5 percent).Without knowing precisely where inthis range we will end the year,andassuming that future M2 targets are alsofour percentage points wide,the poten-tial target range has an eight percentagepoint spread at the end of 1993—fromroughly 5 percent to 13 percent(see fig-ure 1).In only five years hence,therange of uncertainty about the M2 levelwould be 20 percentage points wide(from 12.5 percent to 32.5 percent).  \nOne way to narrow the range of possibleoutcomes for both M2 and prices wouldbe to specify a multiyear path for M2.Such a path would not remove all of thequestions about the aggregate's futuregrowth,but it would limit the range ofuncertainty to the 4 percent bands aroundthe annual targets,regardless of the fore-cast horizon.  \nIt may be risky to rely exclusively onan M2 path to achieve price stability,however,because of the potential for un-  \nApril 1,1992  \nPrice stability as a long-run objectiveofmonetary policy has gained increasingsupport in recentyears,both in theUnited States and abroad.One way toachieve this goal without inhibiting theFederal Reserve's short-term objectivesmay be to target a long-run path forthe price level.Such a multiyear targetwould provide a consistent benchmarkfor setting annual monetarygrowthranges in the presence of uncertaintyabout the income velocity of money.  \nexpected changes in its velocity trendAmong all of the monetary aggregates—currency,the monetary base,M1,  \nM2,and M3—only M2 has exhibiteda constant trend in velocity over thelast 30 years.³However,there is noguarantee that this will continue.From1869 unti 1945,for example,M2velocity declined at an average annual rateof 2 percent;it then rose at the same pacein the 10 years following the war.  \nAlthough M2 velocity has been con-stant on average for thelast 30 years,quarterly values fluctuate","cbCaipt46IDGqV6W","https://ap.wps.com/l/cbCaipt46IDGqV6W","pdf",1129970,"English","# A Price Objective for Monetary Policy\n## ■ The M2 Target\n## ■ A Price-Level Objective","[{\"question\":\"Why does the text argue that price stability is difficult to achieve?\",\"answer\":\"It emphasizes uncertainty created by monetary targeting, especially broad M2 target ranges and the way annual targets are built on the previous year's fourth-quarter averages rather than a midpoint plan.\"},{\"question\":\"How does current M2 targeting practice increase uncertainty about future money stock?\",\"answer\":\"Because target misses are effectively forgiven, M2 can become highly unpredictable over long horizons, producing a widening range of possible outcomes for M2 and prices.\"},{\"question\":\"What does the document propose to reduce uncertainty in achieving price stability?\",\"answer\":\"It suggests specifying a multiyear path for M2, while also noting the need to hedge risks from unstable velocity by framing annual M2 targets within a multiyear price-level path.\"}]","A Price Objective for Monetary Policy - Price stability as a long-run objective of monetary policy | PDF",1789968723,13]