Monetary Aggregates and Monetary Policy

This is a special conference for the Federal Reserve Bank of Boston, and for me personally. The role of monetary aggregates in monetary policy was intensely controversial when I joined the staff of the Board of Governors in May 1969. I was immediately asked to join the staff of the newly formed FOMC Committee on the Directive. Governor Sherman Maisel chaired that committee; the other two members were Frank Morris and Eliot Swan, then President of the Federal Reserve Bank of San Francisco. So, I met Frank shortly after I joined the Board staff and in the context of a careful review of the role of the monetary aggregates. A few years later, in 1973, I was considering leaving the Board and Frank invited me to join the Boston Fed staff for a year, which I did. Toward the end of that year, I accepted an offer from Brown University; however, I commuted from Providence to the Boston Fed about once a week to serve as a consultant until I went on sabbatical in 1980. I recount these facts to emphasize that over the course of the 1970s Frank and I had numerous conversations about the role of the aggregates in monetary policy. Frank had an abiding interest in this subject. Not only did he serve on the 1969–70 Committee on the Directive, but the Boston Fed also organized three important conferences on the role of monetary aggregates in monetary policy. The Bank’s monetary conference topic in June