The Federal Reserve's Abandonment of its 1923 Principles

Julio Rotemberg

No 20507, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the persistence and some of the consequences of the eventual abandonment by the FOMC of the principles embedded in the Federal Reserve's Tenth Annual Report of 1923. The three principles I focus on are 1) the discouraging of speculative lending by commercial banks, 2) the desire to meet the credit needs of business and 3) the preference of a focus on credit over a focus on monetary aggregates. I show that the first two principles remained important in FOMC deliberations until the mid-1960's. After this, the FOMC also spent less time discussing the composition of bank loans.

JEL-codes: E42 E58 N1 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-ban, nep-cba, nep-his, nep-hpe, nep-mac and nep-mon
Note: DAE ME
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