Macroeconomists today generally agree that monetary policy cannot permanently
increase the rate of economic growth
above its potential or decrease the rate of unemployment below its market clearing, or "natural," level (e.g., De Long, 2000; Woodford, forthcoming). In the long run, monetary policy affects only the rate of inflation, and many economists argue that monetary policy can best promote maximum sustainable
economic growth by ensuring price level stability. Monetary policymaking, however, both in the United States and else-where, is often concerned with the short-run.
This article also illustrates how the Federal Reserve System’s decentralized structure fosters a climate of internal debate. Beginning in the 1960s, the monetary policy actions advocated by the St.
Louis Bank in its research publications, in public forums, and in the participation of the Bank’s
presidents in policy meetings often were sharply at odds with the policies adopted by the Federal Reserve System. The Fed’s decentralized structure
permitted the development of alternative policy views and the exploration of new ideas within the
System (Wheelock, 2000). Policy debates often took place within System publications.
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