LearningfromthePandemicMonetaryPolicyExperimentRobertL.HetzelSPECIALSTUDYMERCATUSCENTERATGEORGEMASONUNIVERSITY3ThedramaticchangeinFederalReservepolicyannouncedinChairJeromePowell’sAugust2020JacksonHolespeechoffersanextraordinaryopportunitytodistinguishbetweencompetingviewsoftheoptimalmonetarypolicy.1Thosecontrastingviewstracetheirancestrytothemonetarist-Keynesiandebateofthe1970s.ThePowellpolicyisKeynesianinthatitisorganizedaroundseekingafavorabletradeoffbetweenasociallydesirable,inclusivelowrateofunemploymentandlowinflationof2percent.2Themonetaristpolicyisorganizedaroundpricestabilityandaroundallowingtheworkingofthepricesystemtodeterminetheunemploymentra...
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