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June 2012 issue
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Stroebel, Taylor
Agnello, Cimadomo
Roeger, Herz
Finlay, Wende
Kubelec, SŠ
Brave, Butters
Nelson
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A Review of Allan Meltzerís A History of the Federal Reserve, Volume 2

by Edward Nelson
Federal Reserve Board

Abstract

This paper reviews Allan H. Meltzerís A History of the Federal Reserve, Volume 2. This two-book volume covers Federal Reserve policies from 1951 to 1986. The book represents an enormous achievement in synthesizing a great amount of archival information into a historical account grounded on economic analysis. At the same time, Meltzerís interpretation of specific eras is open to question. He does not appear to acknowledge adequately the degree to which 1950s monetary policy decisions had a solid analytical foundation. Furthermore, Meltzerís account of the shift from the 1970s inflation to the 1980s disinflation implausibly stresses a shift in policymakersí objective function. The crucial change over this period, both in the United States and other countries, is more likely to have been policymakersí improved grasp of the connections between monetary policy and inflation. The review also takes issue with Meltzerís account, in his bookís epilogue, of the financial crisis from 2007 to 2009. In this epilogue, Meltzer understates the degree to which the Federal Reserveís reaction to the financial crisis was in line with the historical practice of the Federal Reserve and other central banks.

JEL Codes: E52, E58.

 
Full article (PDF, 26 pages 160 kb)