From 1979 to 1982, the FOMC used money growth as an intermediate target. To do so, the

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From 1979 to 1982, the FOMC used money growth as an intermediate target. To do so, the committee instructed the Open Market Trading Desk to target the level of reserves in the banking system. What was the justification for doing so? Explain why the result was unstable interest rates. Would you advocate a return to reserve targeting? Why or why not?

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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