The predominant weight of the existing evidence suggests that the effects of monetary policy on real economic activity are systematic, significant, and sizeable. Yet questions remain, both about individual empirical results and, more broadly, about the different methodological approaches that...

This paper considers the implications, for macroeconomic modeling and for monetary policy, of the interrelationships among money, credit and nonfinancial economic activity. Data for the United States since World War II show that the volume of outstanding credit is as closely related to economic...

A review of major lines of thinking about developments in the 1980s bearing on the likelihood of a financial crisis in the United States supports four principal conclusions:First, financial crises have historically played a major role in large fluctuations in business activity. A financial...

Fluctuations of business activity in the United States clearly have their monetary and financial side, but these aspects of U.S. economic fluctuations exhibit few quantitative regularities that have persisted unchanged across spans of tine over which the nation's financial markets have...

Conventional monetary policy rules based on intermediate targets, like the growth of money or credit, rest on the presumption that relationships correcting these variables to key measures of nonfinancial economic activity like income and prices are robust. When financial markets change in such a...

Major changes have taken place in the U.S. economy within the past quarter century. Changes with implications that are at least potentially important for the effect of monetary policy on real economic activity include the elimination of Regulation Q interest ceilings and the development of the...

Stock and Watson's widely noted finding that money has statistically significant marginal predictive power with respect to real output (as measured by industrial production), even in a sample extending through 1985 and even in the presence of a short-term interest rate, is not robust to two...

Three empirical findings presented in this paper show that evidence based on the most recent U.S. experience does not indicate the kind of close or reliable relationship between money and nonfinancial economic activity that, if present, might warrant basing the design and implementation of...

Individuals in the United States consistently do most of their saving through financial intermediaries, but over time there have been and continue to be major shifts in people's reliance on specific kinds of intermediary institutions. In recent years, for example, individual savers have relied...

The standard workhorse models of monetary policy now commonly in use, both for teaching macroeconomics to students and for supporting policymaking within many central banks, are incapable of incorporating the most widely accepted accounts of how the 2007-9 financial crisis occurred and incapable...