IDEAS home Printed from https://ideas.repec.org/a/fip/fedaer/y1999iq1p20-37nv.84no.1.html

Against the tide: Malcolm Bryan and the introduction of monetary aggregate targets

Author

Listed:
  • Rik Hafer

Abstract

Monetary policy was freed from the straightjacket of pegging U.S. Treasury interest rates following the Treasury-Federal Reserve Accord in 1951. This newfound freedom led to a growing debate inside and outside the Federal Reserve System about the appropriate measures to use as operating guides. This article examines the contributions of Malcolm Bryan, president of the Atlanta Fed from 1951 through 1965, to this debate and to the evolution of monetary policy in the postaccord era. ; Bryan parted company with most of his colleagues on the Federal Open Market Committee by trying to steer policy away from a focus on interest rates and money market conditions to placing more weight on the monetary aggregates. This article reviews the transcripts of the committee meetings during Bryan s tenure, which reveal his desire to prevent the disruptive effects of short-run fluctuations in money growth and the longer-term effects of expansive Fed actions, namely, inflation. ; Bryan's approach to monetary policy was a dramatic departure from the prevailing views of the FOMC at the time. In addition to trying to implement the new and controversial research results coming out of monetary economics, his introduction of short-run aggregate growth targets-growth cones-stands out as a significant and innovative development in U.S. monetary policy. Even though his targets and procedures were not adopted by the FOMC at the time, his strategy for monetary policy would resurface as the inflation produced by the policies against which Bryan fought became unacceptable.

Suggested Citation

  • Rik Hafer, 1999. "Against the tide: Malcolm Bryan and the introduction of monetary aggregate targets," Economic Review, Federal Reserve Bank of Atlanta, vol. 84(Q1), pages 20-37.
    • Handle: RePEc:fip:fedaer:y:1999:i:q1:p:20-37:n:v.84no.1
    as

    Download full text from publisher

    File URL: https://www.frbatlanta.org/-/media/documents/research/publications/economic-review/1999/vol84no1_hafer.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David C. Wheelock, 1997. "Monetary policy in the Great Depression and beyond: the sources of the Fed's inflation bias," Working Papers 1997-011, Federal Reserve Bank of St. Louis.
    2. Allan H. Meltzer, 1991. "U.S. policy in the Bretton Woods era," Review, Federal Reserve Bank of St. Louis, issue May, pages 54-83.
    3. Goodfriend, Marvin, 1991. "Interest rates and the conduct of monetary policy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 34(1), pages 7-30, January.
    4. Alfred Broaddus & Marvin Goodfriend, 1984. "Base drift and the longer run growth of M1 : experience from a decade of monetary targeting," Economic Review, Federal Reserve Bank of Richmond, vol. 70(Nov), pages 3-14.
    5. Charles Calomiris & David Wheelock, 1998. "Was the Great Depression a Watershed for American Monetary Policy?," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 23-65, National Bureau of Economic Research, Inc.
    6. Schwartz, Anna J, 1997. "From Obscurity to Notoriety: A Biography of the Exchange Stabilization Fund," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(2), pages 135-153, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rik Hafer & David C. Wheelock, 2013. "Darryl Francis and the Making of Monetary Policy, 1966-1975," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 469-486.
    2. Michael D. Bordo & Edward S. Prescott, 2019. "Federal Reserve Structure, Economic Ideas, and Monetary and Financial Policy," NBER Working Papers 26098, National Bureau of Economic Research, Inc.
    3. Kevin L. Kliesen & David C. Wheelock, 2021. "Managing a New Policy Framework: Paul Volcker, the St. Louis Fed, and the 1979-82 War on Inflation," Review, Federal Reserve Bank of St. Louis, vol. 103(1), pages 71-97, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael D. Bordo & Owen Humpage & Anna J. Schwartz, 2007. "The historical origins of US exchange market intervention policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 109-132.
    2. Bordo, Michael D. & Schwartz, Anna J., 1999. "Under what circumstances, past and present, have international rescues of countries in financial distress been successful?," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 683-708, August.
    3. Bordo, Michael D. & Schwartz, Anna J., 1999. "Monetary policy regimes and economic performance: The historical record," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 3, pages 149-234, Elsevier.
    4. Akosah, Nana Kwame & Alagidede, Imhotep Paul & Schaling, Eric, 2020. "Testing for asymmetry in monetary policy rule for small-open developing economies: Multiscale Bayesian quantile evidence from Ghana," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    5. Calomiris, Charles W. & Mason, Joseph R. & Wheelock, David C., 2011. "Did Doubling Reserve Requirements Cause the Recession of 1937-1938? A Microeconomic Approach," Working Papers 11-03, University of Pennsylvania, Wharton School, Weiss Center.
    6. Edwards, Sebastian, 2020. "Change of monetary regime, contracts, and prices: Lessons from the great depression, 1932–1935," Journal of International Money and Finance, Elsevier, vol. 108(C).
    7. Chappell, Henry W. & McGregor, Rob Roy, 2018. "Committee decision-making at Sweden's Riksbank," European Journal of Political Economy, Elsevier, vol. 53(C), pages 120-133.
    8. Meixing DAI, 2009. "On the role of money growth targeting under inflation targeting regime," Working Papers of BETA 2009-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    9. Spencer Dale, 1993. "The effect of changes in official UK rates on market interest rates since 1987," Bank of England working papers 10, Bank of England.
    10. Huw Pill, 2010. "Monetary Policy in a Low-Interest-Rate Environment: A Checklist," NBER Chapters, in: NBER International Seminar on Macroeconomics 2009, pages 335-345, National Bureau of Economic Research, Inc.
    11. Mehra, Yash P., 2002. "Level and growth policy rules and actual Fed policy since 1979," Journal of Economics and Business, Elsevier, vol. 54(6), pages 575-594.
    12. Erceg, Christopher J. & Levin, Andrew T., 2003. "Imperfect credibility and inflation persistence," Journal of Monetary Economics, Elsevier, vol. 50(4), pages 915-944, May.
    13. Magill, Michael & Quinzii, Martine, 2014. "Anchoring expectations of inflation," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 86-105.
    14. Pierre L. Siklos, 2020. "Looking into the Rear-View Mirror: Lessons from Japan for the Eurozone and the U.S?," IMES Discussion Paper Series 20-E-02, Institute for Monetary and Economic Studies, Bank of Japan.
    15. Ibrahim Chowdhury & Andreas Schabert, "undated". "Assessing Money Supply Rules," Working Papers 2003_9, Business School - Economics, University of Glasgow, revised May 2003.
    16. Michael Dotsey & Christopher Otrok, 1995. "The rational expectations hypothesis of the term structure, monetary policy, and time-varying term premia," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 65-81.
    17. Paulo R. Mota & Abel L. C. Fernandes, 2019. "The Dynamic Adjustment Of Central Banks’ Target Interest Rate: The Case Of The Ecb," FEP Working Papers 613, Universidade do Porto, Faculdade de Economia do Porto.
    18. Andreas M. Fischer, 2000. "Do Interventions Smooth Interest Rates?," Working Papers 00.04, Swiss National Bank, Study Center Gerzensee.
    19. Singh, Ajay Pratap & Nikolaou, Michael, 2014. "Optimal rules for central bank interest rates subject to zero lower bound," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 8, pages 1-67.
    20. Kevin Clinton, 1997. "Implementation of Monetary Policy in a Regime with Zero Reserve Requirements," Staff Working Papers 97-8, Bank of Canada.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedaer:y:1999:i:q1:p:20-37:n:v.84no.1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Meredith Rector (email available below). General contact details of provider: https://edirc.repec.org/data/frbatus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.