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A model to help quantify changes in the Federal Reserve's monetary policies was developed. Policy changes were estimated through time and were expressed as a parameter which incorporates the Federal Reserve's responses to fluctuations in money stock. The model shows that monetary policy changes are not exogenous events and are determined by macroeconomic factors and the behavior of the policy-maker, in this case the Federal Reserve.

The practice of ignoring simultaneity in designing monetary policies is criticized. The existing models for central bank behavior is inconsistent with actual application since it assumes that the central bank's causal relationships and system dynamics are not affected by operating procedure and regulatory structure. An endogenous approach to model building would promote its reliability, robustness and predictive power.

This article presents information on the evaluation of financial and non-financial forecast errors by the U.S. Federal Open Market Committee (FOMC). The members of the FOMC were required to make short-term forecasts of one month that are here evaluated, particularly the projections for nominal gross national product (GNP), real GNP, the GNP deflator, and net exports. The article concludes that the predictions made by the FOMC for the stock market were poor while the non-financial forecasts showed autocorrelation and bias. This poor showing may be the result of insufficient attention being paid to foreign markets.

The article refers to studies by Poole and Pierce concerning the United States Federal Reserve Board and focuses on the monetary policy of Chairman Arthur Burns in the 1970s. The central bank is characterized as having a penchant for secrecy and obfuscation. The agency's stance against an audit by the General Accounting Office, Freedom of Information, and Government in the Sunshine is attributed to distrust of the legislative branch of government and efforts to preserve the Federal Reserve's independence. Topics include the Federal Reserve's short-run perspective on monetary policy and how it affected interest rates, the money supply, and forecasts of the gross national product.

Presents information on a study which examined the economic consequences of removing the penny from circulation and from the coinage system in the United States. Net effect of rounding prices to the nearest 5-cent increment; Analysis of removing low denomination coins from circulation; Conclusions.

Commercial bank behavior is not adequately dealt with in existing macro models of the financial sector. The central role of a demand for excess reserves (or free reserves) function in models of the money supply process is particularly suspect. In this paper, it' is argued that changes in commercial bank behavior induced by alterations in economic and financial conditions and various banking regulations, along with the central bank's approach to policy, have combined to alter the excess reserve function and the relationship between bank reserves and the money supply. Empirical work presented suggests that the "demand" for excess reserves has indeed undergone structural change. Thus, the study indicates that conventional approaches to commercial bank behavior and the demand for excess reserves need to be reworked. [ABSTRACT FROM AUTHOR]

Several important aspects of the growth of the Federal funds market and non-bank participation in this market are examined. It is shown that the recent growth and development that has taken place has significantly influenced bank behavior and the process of bank credit determination. Additionally, it is shown that non-banks' use of Federal funds sales as an integral part of their cash management affects money demand. The implications of these recent developments in the Federal funds market for policymakers are examined. [ABSTRACT FROM AUTHOR]

Focuses on the issues concerning monetary economics. Influence of monetary stock on output and prices; Behaviors of monetary policymakers in developing macro-econometric models; Effects of the demand for money to economic activity.