MONEY SUPPLY CONTROL: RESERVES AS THE INSTRUMENT UNDER LAGGED ACCOUNTING.

Beginning September 12, 1968, a set of changes in Regulation D went into effect, including two major ones which are referred to as the lagged accounting system. One of these sets required reserves in the current period (week) according to deposits two weeks ago, while the other specifies that a bank's "current" reserves consist of current reserve balances on deposit at the Fed and vault cash two weeks ago. It is the object of this paper to examine some implications of these two regulations for the control of the money supply via reserve aggregates. [ABSTRACT FROM AUTHOR]