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Perhaps the 1970s FOMC did what it said it did

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  • Kozicki, Sharon
  • Tinsley, P.A.

Abstract

Briefing forecasts prepared for the Federal Open Market Committee (FOMC) are used to estimate changes in the design of US monetary policy and in the implied policy target for inflation from 1970 through 1997. Both estimated policy rate responses and FOMC transcripts are consistent with intermediate targeting of monetary aggregates throughout the Great Inflation of the 1970s. The unpublished FOMC targets for M1 growth are tabulated. Empirical results support an effective inflation target of roughly 7% in the 1970s and 3% thereafter. A notable difference in the 1970s monetary policies of the US and Germany is the absence of explicit public objectives for US long-run inflation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 56 (2009)
Issue (Month): 6 (September)
Pages: 842-855

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Handle: RePEc:eee:moneco:v:56:y:2009:i:6:p:842-855

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Web page: http://www.elsevier.com/locate/inca/505566

Related research

Keywords: Asymmetric information FOMC M1 targets The Great Inflation Time-varying policy responses;

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References

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  1. Richard Clarida & Jordi Galí & Mark Gertler, 1997. "Monetary policy rules and macroeconomic stability: Evidence and some theory," Economics Working Papers 350, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
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  4. Kozicki, Sharon & Tinsley, P. A., 2001. "Term structure views of monetary policy under alternative models of agent expectations," Journal of Economic Dynamics and Control, Elsevier, vol. 25(1-2), pages 149-184, January.
  5. Sharon Kozicki & Peter Tinsley, 2005. "Minding the gap : central bank estimates of the unemployment natural rate," Research Working Paper RWP 05-03, Federal Reserve Bank of Kansas City.
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Citations

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Cited by:
  1. Olivier Coibion & Yuriy Gorodnichenko, 2010. "Monetary Policy, Trend Inflation and the Great Moderation:An Alternative Interpretation," Working Papers 94, Department of Economics, College of William and Mary.
  2. Olivier Coibion & Yuriy Gorodnichenko, 2011. "Why are target interest rate changes so persistent?," Working Papers 106, Department of Economics, College of William and Mary.
  3. John Silvia & Lorenz Kueng & Olivier Coibion & Yuriy Gorodnichenko, 2012. "Innocent Bystanders? Monetary Policy and Inequality in the U.S," IMF Working Papers 12/199, International Monetary Fund.
  4. Nikolsko-Rzhevskyy, Alex & Papell, David H., 2012. "Taylor rules and the Great Inflation," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 903-918.
  5. Burton A. Abrams & James L. Butkiewicz, 2011. "The Political Business Cycle: New Evidence from the Nixon Tapes," Working Papers 11-05, University of Delaware, Department of Economics.
  6. Ron Alquist & Olivier Coibion, 2013. "The Comovement in Commodity Prices," IMF Working Papers 13/140, International Monetary Fund.
  7. Ron Alquist & Olivier Coibion, 2014. "Commodity-Price Comovement and Global Economic Activity," NBER Working Papers 20003, National Bureau of Economic Research, Inc.

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