NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Lessons from the 1979-1982 Monetary Policy Experiment

Benjamin M. Friedman

NBER Working Paper No. 1272 (Also Reprint No. r0551)
Issued in February 1984
NBER Program(s):   ME

The experience of U.S. monetary policy during 1979-82 provided useful and potentially important new evidence about how monetary policy affects economic activity. This paper considers, inthe light of that evidence, six familiar propositions supporting the use of monetary aggregate targets for monetary policy. These propositions deal with money and nominal income, with price inflation and real economic growth, and with long-term interest rates. The evidence from the1979-82 experiment leads to doubt rather than confidence in each of these six propositions, and hence doubt rather than confidence in the use of monetary aggregate targets.

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Document Object Identifier (DOI): 10.3386/w1272

Published: Friedman, Benjamin M. "Lessons from the 1979-1982 Monetary Policy Experiment." American Economic Review, Vol. 74, No. 2, (May 1984), pp. 382-387.

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