The risk premium hypothesis suggests that absolute changes in short-term interest rates will be larger if the unanticipated component of the Federal Reserve's weekly money supply announcement is positive. Statistical tests suggest, however, that the magnitude of interest rate changes are...

Conventional investigations of the "best" intermediate target variable for monetary policy have used a single criterion: the best fit between the behavior of an aggregate and that of some goal variable such as nominal spending or the aggregate price level. Ignored in this type of study, however,...

Mascaro and Meltzer have implied, but not tested, that increased uncertainty about monetary policy will reduce real income. This proposition is tested directly by adding a. Kalman filter estimate of monetary uncertainty to a St. Louis-type GNP equation. The results indicate that -increased...

It is commonly believed that the Federal Reserve targeted money growth directly and allowed greater variation in interest rates during the October 1979-October 1982 period. Other things the same, this policy regime would be expected to increase the risk premium on the dollar exchange rate...