Review

Darryl R. Francis served as the president and CEO of the Federal Reserve Bank of St. Louis from 1966 to 1976.

The author discusses how Darryl Francis demonstrated that the maverick, the dissenter, the sometimes-lonely voice in the crowd plays a vital role in the continuing evolution of policy thinking and policy making.

The author discusses how Darryl Francis took a leadership role by encouraging the St. Louis monetarist tradition, when it was scorned and derided, by pointing to the need for more restrictive monetary policy in the late 1960s and by continuing to make the case for lower inflation during his service on the FOMC and as president of St. Louis Fed.

This author develops a simple model of the federal funds market that reflects some regulatory and technological changes and that can be used to investigate other changes.

Commentary on "Expectations, Open Market Operations, and Changes in the Federal Funds Rate" by John B. Taylor.

The author models the reserve market based on the Fed’s operating procedure and shows why the liquidity effect cannot be identified using Hamilton’s methodology.

Commentary on "Identifying the Liquidity Effect at the Daily Frequency" by Daniel L. Thornton.

The authors argue, and demonstrate in several ways, that it is treacherous to draw inferences about policy effects solely from policy rules estimated in isolation from a complete macro model. 

Commentary on "Assessing Simple Policy Rules: A View from a Complete Macroeconomic Model" by Eric M. Leeper and Tao Zha.

The authors analyze systematic monetary policy in a VAR framework. The key insight—originally by John Cochrane—is that the effect of systematic monetary policy depends on the balance of economic actors between those who behave as ideal new classical agents (frictionless competitors with rational expectations) and those who follow rules of thumb or face other frictions. 

Commentary on "Measuring Systematic Monetary Policy" by Kevin D. Hoover and Oscar Jordá.

This article first specifies a small prototype model that reflects today’s standard monetary policy approach and asks whether its adoption implies that monetary policy has little or nothing to do with money. The answer is “no.” 

Commentary on "Monetary Policy Analysis in Models Without Money" by Bennett T. McCallum.

The author discusses that it remains unclear how successfully, if at all, optimal control techniques could be applied in the context of the larger models used in practice for forecasting.

Commentary on "Monetary Transmission Lags and the Formulation of the Policy Decision on Interest Rates" by Charles A. E. Goodhart.