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M2 and monetary policy

Robert L. Hetzel

Economic Review, 1989, vol. 75, issue Sep, 14-29

Abstract: Consistent with its mandate in the Humphrey-Hawkins Act of 1978, the Federal Reserve System each year sets a calendar-year target for the monetary aggregate M2. This paper examines the effect of specifying the M2 target as a multiyear trend line and concludes that an operationally significant target for M2 in the form of a trend line that rises at three percent per year will eliminate inflation.

Keywords: Money supply; Monetary policy (search for similar items in EconPapers)
Date: 1989
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