ABSTRACT
I want to develop this theme, and suggest two reasons for particular care and caution about the apparent current successes of monetary policy, here and elsewhere; why it just might all end in tears. First, there is a very natural tendency for more monetarist-leaning economists to attribute most, or all, of the improved outcomes to better understanding of the transmission mechanisms; no more truck with silly ideas like cost-push, and incomes and prices policies. And I would agree that our analysis has improved somewhat, though remembering that this has been a year in which questions have been raised about whether it makes sense for central banks to pay any attention to the growth rates of the monetary aggregates in assessing future inflation prospects, I do not even feel too confident on that score.
