BPEA | 1975 No. 1

Monetary Policy during the Recession

William Poole

1975, No. 1

THE DEPTH of the current recession makes it clear ex post that government
stabilization policy should have been less contractionary in 1974. In fact,
both monetary and fiscal policy were extremely contractionary not only
relative to the needs of a declining economy but also relative to policy
during the 1972-73 boom. During 1974, the full employment budget surplus
rose sharply and monetary expansion slowed markedly. My task in
this report is to analyze the monetary part of recent stabilization policies