Abstract
In recent years many financial innovations have occurred in the United States, while the Federal Reserve (Fed) has moved further away from monetarism. Are these two connected? Can the Fed’s policy in recent years be interpreted as a justified response to financial innovations? I will argue that the answer is no. Some time in the future financial innovations may well make monetary targeting impossible, but so far this has not happened in the US.
I am indebted for helpful comments to Thomas Cargill, Milton Friedman, Kevin Hoover and Raymond Lombra.
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© 1992 Stephen F. Frowen and Dietmar Kath
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Mayer, T. (1992). Federal Reserve Policy since October 1979: A Justified Response to Financial Innovations?. In: Frowen, S.F., Kath, D. (eds) Monetary Policy and Financial Innovations in Five Industrial Countries. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21684-0_2
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DOI: https://doi.org/10.1007/978-1-349-21684-0_2
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