The Fed’s Consistent Monetary Policy: A Long Term Perspective

This paper describes the Federal Reserve's analytical framework under Volcker and Greenspan, as it was constructed in the early 1980s, during a period of high inflation. It traces the modeling and policy implications of this framework. It discusses the Fed's actual track record and the state of the US economy in which the Fed operated and how the Fed's policies interact with US federal fiscal policies. It also discusses why the Fed ignoes the dollar's value and why it remains immune to party politics. The paper summarizes the author's perspective on US monetary policy. It is based on an address delivered by the author at the Second International Conference on Forecasting the Singapore Economy and Annual Review of Central Banking Policies in the Asia- Pacific Basin in Singapore on August 29, 1996.