R. W. Hafer and Scott E. Hein investigate the Federal Reserve’s ability to control closely the stock of money. The authors examine this issue by simulating money growth for 1982 using two alternative control procedures. The first procedure, advocated by some analysts who are concerned by the growing number of financial innovations, is to provide a constant rate of adjusted monetary base growth each month. Under this procedure, money growth and base growth should be quite close if the money multiplier follows a steady pattern. During 1982, however, the multiplier fluctuated significantly. Thus, Hafer and Hein conclude, the adoption of a constant-base-growth strategy would not have materially reduced the variability of money growth in 1982. The second procedure is to use forecasts of the money multiplier to determine the appropriate amount of monthly base growth over the year. Two forecasting procedures were investigated, one based on the “naive” guess that next month’s multiplier is equal to the current month’s, and another based on a more sophisticated statistical approach that models the time series of the multiplier. Using either method, the resulting money growth simulated for 1982 was much closer to the hypothetical policy target than that achieved by using the constant-base-growth strategy. Moreover, quarterly deviations of money growth were reduced substantially. Thus, a “post-mortem of 1982 money growth indicates that much of the volatility in money growth last year was attributable to money multiplier fluctuations, not erratic monetary base growth. Consequently, monetary policy aimed at smoothing the growth of M1 must anticipate and react to multiplier movements.”