A number of different economic and political conditions have contributed to the sluggish rate of the current economic recovery; some of these, such as substantial defense cuts, are widely recognized whereas others are poorly understood. This latter category includes the role of inflation and...

At a quick glance, the behavior of various monetary aggregates in the recent past is quite bewildering. Since the beginning of 1991 (through June, 1992) Ml has grown at an annual rate of 10.5 percent, the adjusted monetary base at an annual rate of 7.8 percent, adjusted reserves at an annual...

The Shadow Open Market Committee has traditionally summarized its monetary-policy advice in a recommended rate of growth of the monetary base. However, since the Shadow Open Market Committee meeting in the spring of 1991, our recommendation has deemphasized the base because rapid growth in...

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 deterioration in the budget outlook has been startling, and the response of policymakers has been equally disappointing. The deficit has zoomed; it will exceed $200 billion in Fiscal Year 1990 and is estimated to be approximately $270 billion in FY1991, $200 billion excluding the additional...

Recently members of the research staff of the Board of Governors have constructed a model of the inflation process that has received considerable attention.' The purpose of this paper is to review critically the assumptions that are the basis of that inflation model and to examine a model of...

The good news on the budget is that real federal spending has slowed. The bad news is that recent and expected federal legislation threaten to reverse this trend and raise pressure to increase taxes. Budget actions and the debate surrounding the budget process have focussed nearly exclusively on...

For the past six months the Clinton Administration has been engaged in a steadily increasing war of words with the Japanese to pressure them to take concrete actions to reduce their "chronic" trade surplus with the U.S. by committing to quantitative targets for U.S. goods sold in Japanese...

For the third time in the last dozen years, the Mexican economy is in financial distress largely because of bad monetary policies pursued by Mexican officials. The U.S. response in all three instances has been to extend loans from the Federal Reserve and the Treasury. These loans provide a...

This sideways movement of money market interest rates reflects a standoff of opposing forces. On the one hand, the high rate of money growth has made the Federal Reserve reluctant to press interest rates down further; and the market, understanding both the Fed's reluctance and the danger that...