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January 1979

Reconciling Monetary Policy and the Institutional Structure

by Murray L. Weidenbaum

Most of the critics of the monetarist approach to fighting inflation are on the left, advocating various extensions of government power over private wage and price decisions. The author’s own inclination is to tilt to the right, and this critique is aimed from that end of the policy spectrum. He notes that microeconomic structural and institutional changes must be seen as supplements to appropriate monetary and fiscal policy and that these changes would enhance the effectiveness of these traditional macroeconomic tools.