There is strong evidence of a stable “money demand” relationship for MZM and M2 through the 1990s. Though the M2 relationship breaks down somewhere around 1990, evidence has been accumulating that the disturbance is well characterized as a permanent upward shift in M2 velocity that began...

A comparison showing that the transition costs of indexing inflation (a major obstacle to monetary policy reform) are approximately equal to the minor shoe-leather benefits of having price stability.

The Federal Reserve announces targets for the monetary aggregates that are implicitly conditioned on an assumption about future velocity for each of the monetary aggregates. In this paper we present explicit models of velocity for constructing rigorous tests to determine whether the behavior of...

A study of the effect of disinflation policies on monetary velocity, which shows a systematic relation between unexpected changes in the money-income relationship and changes in the trends of inflation rates, and which concludes that the failure to commit to a stable price policy tends to...

A demonstration of time series techniques used to forecast quarterly money supply levels. The results indicate that a bivariate model, including an interest rate and M1 predicts M1 better than the univariate model using M1 only, and as well as a 5-variable model which adds prices, output, and...

An empirical and theoretical analysis of how changes in the monetary policy function affect the covariance structure of macroeconomic data.

An investigation of the nature of the dynamic process implied by staggered-reserve accounting, using a simple reduced-form model of the money-supply process.

An analysis of how the money supply process can affect the cross-covariance structure of inflation and monetary growth, showing that the Federal Reserve's change in emphasis to monetary targeting in late 1979 could have made the apparently long lag from money growth to inflation virtually...

An examination of a procedure for comparing non-nested models to the problem of choosing an intermediate target for monetary policy. Six models of economic activity, based on six different monetary aggregates, are compared.

An argument supporting zero inflation as the sole objective of monetary policy, with particular emphasis on the Bank of Canada's commitment to an explicit, low inflation target.