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THE MAKING OF MONETARY POLICY: DESCRIPTION AND ANALYSIS *
Author(s) -
POOLE WILLIAM
Publication year - 1975
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1975.tb00992.x
Subject(s) - federal funds , economics , monetary policy , money market , monetary economics , stock (firearms) , broad money , interest rate , open market operation , stock market , macroeconomics , mechanical engineering , engineering , paleontology , horse , biology
At the present time Federal Reserve policy‐making may be viewed as having a two‐part structure. First, based on a four to eight quarter economic forecast, the Fed selects a target rate of money growth. Second, based on a short‐term money market forecast, the Fed selects a Federal funds rate range thought to be consistent with the money growth target. The procedure followed in selecting the money growth target is “state‐of‐the‐art” but the policy implementation based on controlling the Federal funds rate has permitted an undesirable pro‐cyclical behavior of the money stock.