Late in 1982, the growth of the money supply (MI) accelerated sharply while nominal GNP growth declined. The ratio of GNP to MI is refereed to as the "income velocity of money" and the inverse of velocity is the "demand for money." So when income growth slowed while money growth increased, it...

There are no good monetary policy options. Since policymakers must choose between alternative policies with undesirable consequences, there is no reason to assume that a single option will be selected and adhered to. Rather, policies will continue to alternate between "spurts" of monetary growth...

The course of the economy this year may have detoured slightly, but has not been derailed by the crisis in Middle Eastern deserts. The U.S. economy was already flirting with recession before Iraq invaded Kuwait. The short-run effects of the invasion create the worst of all worlds from the...

The risk of recession in 1988 has diminished significantly since the end of last year. Since the SOMC meeting last September, two developments posed a possible risk to continued economic expansion in 1988: First, the stock market crash of October 19 was thought by some observers to have severely...

Adopting a restrictive policy to reduce inflation and being willing to stick with it even in a long and deep recession is not evidence that it will be successful. The test of whether a long-run anti-inflation policy will be maintained does not occur until the subsequent expansion gets underway....