TY  - JOUR
AU  - Friedman,Benjamin M.
TI  - The Greenspan Era: Discretion, Rather Than Rules
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12118
PY  - 2006
Y2  - March 2006
UR  - http://www.nber.org/papers/w12118
L1  - http://www.nber.org/papers/w12118.pdf
N1  - Author contact info:
Benjamin M. Friedman
Department of Economics
Littauer Center 127
Harvard University
Cambridge, MA  02138
Tel: 617/495-4246
Fax: 617/495-7730
E-Mail: bfriedman@harvard.edu
M2  - featured in NBER digest on 2006-03-27
AB  - What stands out in retrospect about U.S. monetary policy during the Greenspan Era is the ongoing movement away from mechanistic restrictions on the conduct of policy, together with a willingness on occasion to depart even from what more flexible guidelines dictated by contemporary conventional wisdom would imply, in the interest of carrying out the Federal Reserve System%u2019s dual mandate to pursue both stable prices and maximum employment.  Part of this change was procedural %u2013 for example, the elimination of money growth targets.  The most substantive demonstration of policy flexibility came in the latter half of the 1990s, as unemployment fell below 6% (in 1994), then below 5% (in 1997), and then remained below 5% for more than four years, yet the Federal Reserve did not tighten monetary policy.  This policy stance was consistent with a view of the economy, including faster productivity growth and increased exposure to international competition, that Chairman Greenspan had articulated nearly a decade before.
ER  -