Fisher, who does not have a vote this year on the Fed's policy-setting panel, said he commissioned the paper "to inform me in my capacity as a member of the Federal Open Market Committee."

Calling the 45-page paper's findings "most illuminating," Fisher called particular attention to its contention that easy money is ineffective at boosting growth and in fact hurts the economy by encouraging governments to pursue "imprudent behavior" like excessive borrowing.

When central banks use easy monetary policy to buy time for policies like debt reduction that are better placed to foster strong and sustained growth, "The danger remains, of course, that ultra easy monetary policy will be wrongly judged as being sufficient to achieve these ends," former Bank for International Settlements head economist William White wrote in the paper.

"The arguments presented in this paper then logically imply that monetary policy should be tightened, regardless of the current state of the economy, because the near term expected benefits of ultra easy monetary policies are outweighed by the longer term expected costs."

Raising interest rates would be painful, but may be where central banks of developed economies "are now headed, absent the vigorous pursuit by governments" of non-monetary policies to boost growth, White wrote.

Fisher, who has often spoken against further monetary easing, said in May that the time had not yet come for policy tightening. A spokesman on Monday said that view had not changed.

Many policymakers at the U.S. central bank's most recent meeting thought that a new round of easing would likely be needed "fairly soon" unless economic conditions improved, minutes from the July 31-August 1 meeting showed.

Investors are looking to a speech by Fed Chairman Ben Bernanke on Friday for clues about how close fresh monetary easing might be.

(Reporting by Ann Saphir; Editing by Dan Grebler)

• A Permanent Economic Emergency