Showing posts with label Non-borrowed reserves. Show all posts
Showing posts with label Non-borrowed reserves. Show all posts

Happy (belated) non-borrowed reserves targeting day

Friday, October 7, 2011

How come none of the economics blogs I follow regularly noted that yesterday was the 30th anniversary of Paul Volcker's announcement that the Fed would begin targeting non-borrowed reserves rather than the federal funds rate? This decision was the beginning of the end of the Great Inflation that wracked the economy in the 1970s. It was such a historical milestone that today no respectable macroeconomist will run a regression on post-war US data without acknowledging the likelihood of a structural break in 1979:Q4.