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March/April 1994, 
Vol. 76, No. 2
Posted 1994-03-01

A Conference Panel Discussion

by Michael J. Boskin, Philip H. Dybvig, and Bennett T. McCallum

Michael J. Boskin puts a broader-brush perspective on monetary aggregates, intermediate targets, rules versus discretion, and the recent history of monetary policymaking. Philip H. Dylnrig looks at the Federal Reserve through the lens of decision theory. While he does not necessarily suggest that the Fed must or should specify an explicit objective function, he does think that decision theory is nonetheless a very useful framework for thinking about the economy, monetary aggregates, and the Fed’s policy role. Bennett T. McCallum addresses how he believes there is a good way of conducting monetary policy that does not rely on any targeted monetary aggregate. Instead, it uses as its target variable nominal GDP, or GNP, or domestic demand, or some such measure of aggregate nominal spending.