The contributions and limitations of "monetary" analysis

During Voicker's presidency, the role of monetary aggregates as a guide to policy came under increasing public discussion. In this speech, Voicker discusses the advantages and pitfalls of a strategy of targeting monetary aggregates and alternative operating procedures. He argues that monetary targeting imposes a beneficial discipline on Federal Reserve policies. He also notes, however, that instability in velocity over horizons relevant for policy and the possibility of credit market disturbances make attention to other sources of information imperative.