A. Steven Holland has three major purposes: (1) to present the basic theory of rational expectations as it relates to monetary policy in a way that stresses its applicability to the real world, (2) to discuss some of the ways that rational expectations models can be altered to give results that refute the policy ineffectiveness proposition, and (3) to assess the overall contribution of rational expectations theory to our understanding of the role of monetary policy. The author points out that the policy recommendation that frequently arises from rational expectations models—a more predictable monetary policy—is essentially the same as that recommended by monetarists and depends critically on there being substantial costs to unpredictable money growth.