The 1920s and 1930s saw the Fed reject a state-of-the-art empirical policy framework for a logically defective one. Consisting of a quantity theoretic analysis of the business cycle, the former framework featured the money stock, price level, and real interest rates as policy indicators. By...

Many economists would agree no doubt that the strict classical quantity theory of money is logically incompatible with the concept of a stable, long-run Philips curve tradeoff between output and inflation