ABSTRACT
Press reports about the state of the economy often give readers the impression that monetary policy and the people who direct it are quite powerful. Many prominent academic economists seem to agree that monetary policy is quite powerful. In reviewing the monetary policy experience of the 1970s, Nobel Laureate James Tobin wrote, “In one respect demand-management policies worked as intended in the 1970s the decade is distinguished by its three recessions, all deliberately induced by policy. Monetary policymakers themselves often describe their role as powerful. Although the view that monetary policy has real effects in the short run but is supemeutral in the long run is widely accepted by academic economists, business economists, and economic policymakers, these groups are not in complete agreement about the ultimate real effects of monetary policy.
