Base Drift and the Longer Run Growth of M1: Experience from a Decade of Monetary Targeting

13 Pages Posted: 22 Oct 2012

See all articles by J. Alfred Broaddus

J. Alfred Broaddus

Federal Reserve Banks - Federal Reserve Bank of Richmond

Marvin Goodfriend

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 1985

Abstract

This article discusses a technical aspect of the Federal Reserve's monetary targeting procedure that has come to be known as "base drift." The Fed has been announcing larger ranges for the growth of M1 and other monetary aggregates since 1975. These ranges have been expressed in terms of rates of growth from a base quarter to the quarter four quarters later. The term "base drift" refers to the Fed's practice of using the actual dollar level of an aggregate in the base quarter as the base level for the target range, rather than the midpoint of the targeted range set in the preceding targeting period.

Suggested Citation

Broaddus, J. Alfred and Goodfriend, Marvin, Base Drift and the Longer Run Growth of M1: Experience from a Decade of Monetary Targeting (January 1, 1985). Federal Reserve Bank of Richmond Working Paper No. 85-1. Available at SSRN: https://ssrn.com/abstract=2123488 or http://dx.doi.org/10.2139/ssrn.2123488

J. Alfred Broaddus (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond

P.O. Box 27622
Richmond, VA 23261
United States

Marvin Goodfriend

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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