When assessing the economic effects of monetary policy, economists have, until recently, emphasized the role of unanticipated changes in policy. But are these policy shocks likely to be the most important influence on the economy? Mike Dotsey believes not. It seems more likely that the Fed’s systematic behavior plays a bigger part in what happens in the U.S. economy. In this article, Dotsey explains the ways in which systematic policy influences economic activity.

This article appeared in the First Quarter 2004 edition of Business Review.

View the Full Article