David E. LindseyBoard of Governors of the Federal Reserve System
1982, No. 1
ECONOMIC developments during the past year were distinctly unkind to the nostrums of monetary economists. The phenomenal growth of negotiable orders of withdrawal (NOW accounts) and money market mutual fund shares and, more recently, the emergence of retail sweep accounts reopened questions about the stability of money demand and the value of monetary aggregates as intermediate targets. The stubborn persistence of high interest rates in the face of unwinding inflation and deepening recession puzzled many economists. Observing the continued volatility of both interest rates and money, some critics of the Federal Reserve’s new operating procedures concluded that short-run monetary control was receiving too little attention while other critics concluded just the reverse.
