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1979–1982: RULES OR DISCRETION IN MONETARY POLICY?
Author(s) -
Hoelscher GREGORY
Publication year - 1990
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.1465-7295.1990.tb00814.x
Subject(s) - economics , discretion , monetary policy , monetarism , carry (investment) , monetary economics , keynesian economics , function (biology) , macroeconomics , law , political science , evolutionary biology , biology
What determined MI growth from November 1979 through October 1982? A reaction function is developed and tested which ascribes the level of M1 to two Fed motives. One is the Fed's desire to hit its money growth targets, the other is to carry out a counter‐cyclical short‐run monetary policy. Both motives are found to be significant during the period. This evidence is consistent with the contention of some economists that the period was not a valid test of monetarist policy rules.