U.S. Monetary Policy During the 1990s

60 Pages Posted: 7 Aug 2001

See all articles by N. Gregory Mankiw

N. Gregory Mankiw

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2001


This paper discusses the conduct and performance of U.S. monetary policy during the 1990s, comparing it to policy during the previous several decades. It reaches four broad conclusions. First, the macroeconomic performance of the 1990s was exceptional, especially if judged by the volatility of growth, unemployment, and inflation. Second, much of the good performance was due to good luck arising from the supply-side of the economy: Food and energy prices were well behaved, and productivity growth experienced an unexpected acceleration. Third, monetary policymakers deserve some of the credit by making interest rates more responsive to inflation than was the case in previous periods. Fourth, although the 1990s can be viewed as an example of successful discretionary policy, Fed policymakers may have been engaged in "covert inflation targeting" at a rate of about 3 percent. The avoidance of an explicit policy rule, however, means that future policymakers inherit only a limited legacy.

Suggested Citation

Mankiw, N. Gregory, U.S. Monetary Policy During the 1990s (August 2001). Harvard Institute of Economic Research Paper No. 1927. Available at SSRN: https://ssrn.com/abstract=279232 or http://dx.doi.org/10.2139/ssrn.279232

N. Gregory Mankiw (Contact Author)

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