1969: The Role of Money in Economic Activity: Complicated or Simple?

  • Edward M. Gramlich


A hot dispute currently rages as to the importance of money in influencing economic activity. But we would be wrong to think this a new controversy. Indeed, it is a very old controversy which has been with us for decades. Money was all-important in classical models of the economy but much less so in Keynesian models which gained predominance in the Great Depression and continued into the postwar period. Lately, however, there has been a strong revival of interest in monetary phenomena and this revival has led to the current heated dispute on the importance of money.


Interest Rate Monetary Policy Econometric Model Federal Reserve Credit Rationing 
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  1. 1.
    De Leeuw and I have published articles in the Federal Reserve Bulletin for January, 1968, and June, 1969Google Scholar
  2. Harold Shapiro and Robert Rasche have an article in the May, 1969, American Economic Review,Google Scholar
  3. Ando and Modigliani have one in the May, 1969, American Economic Review.Google Scholar
  4. 4.
    See J. L. Jordan, “The Market for Deposit-Type Financial Assets,” UCLA PhD thesis, 1969.Google Scholar
  5. 5.
    An article by Michael Keran and Christopher Babb, two colleagues of Andersen and Jordan, in the June, 1969, St. Louis Review argues at length that free reserves is “the most reliable indicator of monetary policy” (John Wood’s phase).Google Scholar

Copyright information

© Edward M. Gramlich 2016

Authors and Affiliations

  • Edward M. Gramlich
    • 1
  1. 1.Federal Reserve SystemUSA

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