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Journal Article
What remains of monetarism?
In October 1979 the Federal Reserve, in an attempt to curb double-digit inflation, announced that it would place more weight on monetary aggregates in policy deliberations. This policy shift helped reduce inflation but sent the economy into a recession. Three years later the Fed abandoned monetary targets and returned to targeting the federal funds rate. ; Monetary growth targets currently play no official role in the setting of U.S. monetary policy. Is such disregard justified by the data any more today than it was twenty years ago? This article provides a historical perspective on the ...
Journal Article
Are money growth and inflation still related?
Despite the long history and the substantial evidence supporting the conclusion that persistent changes in the price level are associated with changes in the money supply, the predicted association remains dis-puted. Is it debated because the empirical relationship holds over time periods so long that it may be uninformative for practitioners and policymakers, who are more concerned about inflation next month or next year? If it takes a generation for the relationship between money growth and inflation to become apparent, it would not be surprising that central bankers and practitioners put ...
Journal Article
The federal government's budget surplus: Cause for celebration?
Projected surpluses in the federal government's budget have generated fanfare sometimes verging on euphoria. Because the federal government last had a surplus in 1969, a projected surplus for fiscal year 1998 and later years is being viewed as something of a milestone. Unlike policies of the last three decades that have at least paid lip service to lowering the deficit, policy options now may include ways to use the surplus. Some have called for lowering taxes and others for increasing expenditures or retiring federal government debt. ; This article discusses the importance of going beyond ...
Journal Article
Against the tide: Malcolm Bryan and the introduction of monetary aggregate targets
Monetary policy was freed from the straightjacket of pegging U.S. Treasury interest rates following the Treasury-Federal Reserve Accord in 1951. This newfound freedom led to a growing debate inside and outside the Federal Reserve System about the appropriate measures to use as operating guides. This article examines the contributions of Malcolm Bryan, president of the Atlanta Fed from 1951 through 1965, to this debate and to the evolution of monetary policy in the postaccord era. ; Bryan parted company with most of his colleagues on the Federal Open Market Committee by trying to steer policy ...
Working Paper
Bank failures in banking panics: Risky banks or road kill?
Are banks that fail in banking panics the riskiest ones prior to the panics? The free banking era in the United States provides useful data to examine this question because the assets held by the banks were traded at the New York Stock Exchange. The authors estimate the ex ante riskiness of a bank?s portfolio by examining the portfolio relative to mean-variance frontiers and by examining the bank's leverage and notes relative to assets. The authors find that the ex ante riskiness of a bank?s portfolio helps predict which banks fail and the extent of noteholders? losses in the event of failure.
Journal Article
Monetary policy and recent business-cycle experience
Some critics of recent monetary policy have focused on slow M2 growth, claiming that the Federal Reserve is too interested in price stability and is forsaking its growth mandate. Others criticize the Fed for achieving price stability too cautiously and urge the adoption of a rule that seeks to eliminate inflation more quickly. ; R. W. Hafer, Joseph Haslag and Scott Hein examine two alternative monetary policies and gauge their expected impacts on economic activity. Both policies are simulated over the period 198792. One policy, a GNP-targeting rule similar to one proposed by Bennett McCallum, ...
Working Paper
Evaluating monetary base targeting rules
Working Paper
Monetary base rules: the currency caveat
