01992cam a22002297 4500001000600000003000500006005001700011008004100028100002500069245015000094260006600244490004100310500001800351520104300369530006101412538007201473538003601545710004201581830007601623856003701699856002601736w1294NBER20140712012317.0140712s1986 mau||||fs|||| 000 0 eng d1 aMcCallum, Bennett T.10aSome Issues Concerning Interest Rate Pegging, Price Level Determinacy, and the Real Bills Doctrineh[electronic resource] /cBennett T. McCallum. aCambridge, Mass.bNational Bureau of Economic Researchc1986.1 aNBER working paper seriesvno. w1294 aOctober 1986.3 aIn a recent paper, Canzoneri, Henderson, and Rogoff have shown that it is possible for the monetary authority to peg the nominal interest rate without creating price level indeterminacy in a simplified version of the 1975 Sargent-Wallace model. The present paper begins by reviewing that result, which involves a limiting case of a money supply rule that depicts the authority as responding to current values of the interest rate. Then it shows that there exists an alternative rule that will peg the nominal rate without creating indeterminacy, but that this rule induces a different pattern of price level fluctuations. Next the paper considers whether indeterminacy will prevail if the authority tries to effect a peg in a third way: by simply standing ready to buy and sell securities at the desired rate. Finally, the implication of the foregoing results are drawn for arguments concerning the real bills doctrine and some critical comments are directed at the recent attempted rehabilitation of that doctrine by Sargent and Wallace. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w1294.4 uhttp://www.nber.org/papers/w1294 uurn:doi:10.3386/w1294