 Monetary policy and recent business-cycle experienceRik Hafer (), Joseph Haslag and Scott Hein Economic and Financial Policy Review, 1994, issue Q III, 14-28 Abstract: 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, slows nominal GNP growth substantially. Simulated nominal GNP, however, is quite volatile under the GNP-targeting rule. The other policy, referred to in the article as the M2-targeting approach would have resulted in somewhat faster average nominal GNP growth compared with what actually occurred, the start-and-stop pattern exhibited during the recent U.S. recovery would still be present. Thus, the evidence indirectly supports the notion that real shocks were the driving force behind recent weakness in economic activity. Keywords: Business cycles; Monetary policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedder:y:1994:i:qiii:p:14-28 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Economic and Financial Policy Review from Federal Reserve Bank of Dallas Contact information at EDIRC. |
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