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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 The unpublished FOMC targets for M1 growth are tabulated.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. Kozicki, Sharon & Tinsley, P. A., 2003. "Permanent and transitory policy shocks in an empirical macro model with asymmetric information," CFS Working Paper Series 2003/41, Center for Financial Studies (CFS).
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Citations

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Cited by:
  1. Olivier Coibion & Yuriy Gorodnichenko & Lorenz Kueng & John Silvia, 2012. "Innocent Bystanders? Monetary Policy and Inequality in the U.S," NBER Working Papers 18170, National Bureau of Economic Research, Inc.
  2. Olivier Coibion & Yuriy Gorodnichenko, 2011. "Why Are Target Interest Rate Changes So Persistent?," NBER Working Papers 16707, National Bureau of Economic Research, Inc.
  3. 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.
  4. Olivier Coibion & Yuriy Gorodnichenko, 2008. "Monetary Policy, Trend Inflation and the Great Moderation: An Alternative Interpretation," NBER Working Papers 14621, National Bureau of Economic Research, Inc.
  5. Ron Alquist & Olivier Coibion, 2014. "Commodity Price Co-Movement and Global Economic Activity," Working Papers 14-32, Bank of Canada.
  6. Ron Alquist & Olivier Coibion, 2013. "The Comovement in Commodity Prices," IMF Working Papers 13/140, International Monetary Fund.
  7. Nikolsko-Rzhevskyy, Alex & Papell, David H., 2012. "Taylor rules and the Great Inflation," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 903-918.

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