Opinion: Data Measurement and Monetary Policy

Anna Kovner

Econ Focus, 2025, vol. 25, issue Q4

Abstract: The impact of monetary policy on the economy unfolds over time, with what Milton Friedman described as a "lag that is both long and variable." To make ideal policy, central bankers would have to know the nature of shocks to supply and demand, the fundamental structure of the U.S. economy (for example, the level of maximum employment or how monetary policy changes are transmitted to firms and households), the evolution of non-monetary structural changes and economic policy, and the rate at which monetary policy would be neither expansionary nor contractionary (the neutral rate).

Keywords: Monetary policy; Business Surveys (search for similar items in EconPapers)
Date: 2025
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