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The Monetary Policy of the Federal Reserve
A History

$67.00 (P)

Part of Studies in Macroeconomic History

  • Date Published: March 2008
  • availability: Available
  • format: Hardback
  • isbn: 9780521881326

$ 67.00 (P)

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About the Authors
  • The Monetary Policy of the Federal Reserve details the evolution of the monetary standard from the start of the Federal Reserve through the end of the Greenspan era. The book places that evolution in the context of the intellectual and political environment of the time. By understanding the fitful process of replacing a gold standard with a paper money standard, the conduct of monetary policy becomes a series of experiments useful for understanding the fundamental issues concerning money and prices. How did the recurrent monetary instability of the 20th century relate to the economic instability and to the associated political and social turbulence? After the detour in policy represented by FOMC chairmen Arthur Burns and G. William Miller, Paul Volcker and Alan Greenspan established the monetary standard originally foreshadowed by William McChesney Martin, who became chairman in 1951. Monetary Policy explains in a straightforward way the emergence and nature of the modern, inflation-targeting central bank.

    • The complete history of the U.S. Federal Reserve Bank
    • Use of a historical narrative writing style makes the book accessible to a wide audience without compromising rigor
    • Cuts through the thicket of verbiage that surrounds monetary policy to isolate its key characteristics
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    Reviews & endorsements

    "The Monetary Policy of the Federal Reserve: A History is a comprehensive study of the evolution of monetary policy practiced by the Federal Reserve since its founding nearly a century ago. Hetzel brings a unique perspective to this material, a monetarist point of view rooted in his U of Chicago training, but a view profoundly influenced by an understanding of monetary policy in practice acquired as a life-long policy advisor at the Federal Reserve Bank of Richmond. The story is one of a nominal anchor for monetary policy lost with the collapse of the gold standard and found after decades of monetary turbulence in the priority that the Federal Reserve puts on low inflation and in anchoring inflation expectations. Hetzel enriches the story with remarkable insights about Federal Reserve behavior and with key insights from the modern New Neoclasscial Synthesis (New Keynesian) theory of monetary policy. This is an amazing story, one that Hetzel tells in great detail and with great enthusiasm." - Marvin Goodfriend, Carnegie Mellon University

    "An invaluable historical account of the history of U.S. monetary policy under the Federal Reserve System." - Robert G. King, Boston University

    "Robert Hetzel’s chronicle of the turning points in Federal Reserve conduct of monetary policy illuminates the problems that successive chairmen from William McChesney Martin on encountered in transforming the central bank into the modern Fed. Hetzel describes three monetary experiments beginning with a detour to the real bills doctrine, followed by decades of stop-go experience until the Paul Volcker-Alan Greenspan disinflation that ushered in a new monetary standard. Over time the Fed learned rule-like behavior that created expectations by the public of low stable inflation that is now the nominal anchor for a fiat money regime. It differentiates monetary policy as practiced before the 1980s from its practices since. Hetzel has written a path-breaking study." - Anna J. Schwartz, National Bureau of Economic Research

    "Hetzel... has produced a meticulous examination of monetary policy by the Federal Reserve over time under different chairpersons, with much attention given to the Volcker-Greenspan era. Recommended." - Choice

    "The Monetary Policy of the Federal Reserve: A History by Robert Hetzel studies the evolution of monetary policy from the beginning of the Federal Reserve until the end of the Greenspan Era. The title claims the book is a history, and it is that, but it is much more. As a history, Hetzel’s book details the conduct of monetary policy over nearly ninety years, and sets that conduct in the context of the intellectual and political environment of the time. As an economic synthesis, Hetzel’s book views the evolution of monetary policies as a series of experiments useful for understanding fundamental issues concerning money, prices, and macroeconomic policy. The past serves as a laboratory for understanding the present. The emergence of modern monetary policy and prospects for our nation’s financial future are understood by studying the learning-curve of the leaders of the Federal Reserve, the painful process of replacing the gold standard with a fiat money standard, and the recurrent monetary instability during the decades following the Second World War." -

    "Hetzel’s book deepens our understanding... of the entire story of this important period. It deserves a place on the bookshelf of every serious student of monetary history." - Christina D. Romer, Journal of Economic History

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    Product details

    • Date Published: March 2008
    • format: Hardback
    • isbn: 9780521881326
    • length: 408 pages
    • dimensions: 234 x 156 x 27 mm
    • weight: 0.79kg
    • contains: 50 tables
    • availability: Available
  • Table of Contents

    Foreword: what is the monetary standard?
    1. The pragmatic evolution of the monetary standard
    2. Learning and policy ambiguity
    3. From gold to fiat money
    4. From World War II to the Accord
    5. Martin and lean-against-the-wind
    6. Inflation is a nonmonetary phenomenon
    7. The start of the great inflation
    8. Arthur Burns and Richard Nixon
    9. Bretton Woods
    10. Policy in the Ford administration
    11. Carter, Burns, and Miller
    12. The political economy of inflation
    13. The Volcker disinflation
    14. Monetary policy after the disinflation
    15. Greenspan's move to price stability
    16. International bailouts and moral hazard
    17. Monetary policy becomes expansionary
    18. Departing from the standard procedures
    19. Boom and bust
    20. Backing off from price stability
    21. The Volcker–Greenspan regime
    22. The Fed: inflation fighter or inflation creator?
    23. The stop-go laboratory
    24. Stop-go and interest rate inertia
    25. Monetary nonneutrality in the stop-go era
    26. A century of monetary experiments.

  • Instructors have used or reviewed this title for the following courses

    • Federal Reserve and Busienss Forecasting
  • Author

    Robert L. Hetzel, Federal Reserve Bank of Richmond

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