M2 and Monetary Policy

FRB Richmond Economic Review, Vol. 75, No. 5, September/October 1989, pp. 14-29

16 Pages Posted: 2 Nov 2012

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 1989

Abstract

Consistent with its mandate in the Humphrey-Hawkins Act of 1978, the Federal Reserve System each year sets a calendar-year target for the monetary aggregate M2. This paper examines the effect of specifying the M2 target as a multiyear trend line and concludes that an operationally significant target for M2 in the form of a trend line that rises at three percent per year will eliminate inflation.

Suggested Citation

Hetzel, Robert L., M2 and Monetary Policy (1989). FRB Richmond Economic Review, Vol. 75, No. 5, September/October 1989, pp. 14-29, Available at SSRN: https://ssrn.com/abstract=2125309

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

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

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