Working Papers

A requirement for the study of macroeconomic behavior in the early 1980s is an understanding of the monetary policy pursued by the Federal Reserve and of the way this policy was implemented.  In an attempt to fulfill this requirement, the formulation and implementation of monetary policy are discussed in this paper for the period of October 1979 to December 1983.  Particular attention is paid to the choice by the Fed of the funds rate or the money supply as its primary policy variable.  It is contended that the operating procedures adopted in October 1979 contributed to the cyclical behavior of interest rates and money.