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Economic Quarterly

Winter 2002

Recent Developments in Monetary Policy Analysis: The Roles of Theory and Evidence

Bennett T. McCallum

Both academic thinking about monetary economics and the practice of monetary policy have changed drastically since 1971–1973, when the rational expectations revolution was beginning and the Bretton Woods system was crumbling. The present article considers whether the various changes that have taken place were influenced primarily by economic theory or by empirical evidence—or by a combination of the two.

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