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Monetary Aggregate Targeting In The 1970s: A Time Series Analysis

David A. Pierce and Jai-Hoon Yang
Business Economics
Vol. 15, No. 4 (September 1980), pp. 76-80
Stable URL: http://www.jstor.org/stable/23482376
Page Count: 5
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Monetary Aggregate Targeting In The 1970s: A Time Series Analysis
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Abstract

This article addresses the question of whether the Federal Reserve has paid more attention to the monetary aggregates as targets in the 1970s than previously, given its professed commitment to do so. The question is transformed into a testable hypothesis involving lead-lag relationships between monetary aggregates and the Federal Funds rate. We find that this relationship is indeed different in the 1970s than in the 1960s, and that the differences are consistent with the hypothesis that the Federal Reserve has pursued monetary targets in the latter period and not in the former period, despite the greater variability in the growth rates of the monetary aggregates in the latter period.

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