Monetary Policy in 1974 and Beyond

James Tobin

JT

James Tobin

WHAT SHOULD BE THE AIM of monetary policy in 1974? One answer is the
fulfillment of the administration’s forecast for the year. As explained in
the President’s Economic Report, the forecast is also the target; according to
the Council of Economic Advisers, it is the best feasible path for the economy.
I personally do not agree with this policy, nor do I believe it carries
out the mandate of the Employment Act of 1946. But accepting it, one can
ask what kind of monetary policy is likely to fulfill the forecast.