Money in the Search for a Nominal Anchor

Peter Ireland

No 1078, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: From the very start of its fifty-year history, the Shadow Open Market Committee advocated for a monetary policy strategy focused on controlling inflation. With time, the rationale for price stability as the principal focus of monetary policy came to be accepted more widely by academic economists and Federal Reserve officials as well. The SOMC also consistently favored an operational approach involving the use of the monetary base as the policy instrument and a broader monetary aggregate as an intermediate target. These features of SOMC strategy, by contrast, have never gained widespread support among academics or at the Fed. This paper outlines the SOMC’s preferred approach, focusing on how the Committee’s money- based strategy and arguments for it evolved over time. It then shows that these arguments still apply with force today.

Keywords: Inflation; Money Growth; Monetary Policy; Monetarism; Shadow Open Market Committee (search for similar items in EconPapers)
JEL-codes: B22 B31 E31 E51 E52 E58 (search for similar items in EconPapers)
Date: 2024-07-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-his, nep-hpe, nep-mon and nep-pay
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