The connection between monetary policy and economic performance is welldocumented from "summary" of A Monetary History of the United States, 1867-1960 by Milton Friedman,Anna Jacobson Schwartz
The relationship between monetary policy and economic performance has been extensively studied and analyzed over the years. The impact of monetary policy on the economy is a central theme in understanding the fluctuations and trends in economic activity. In "A Monetary History of the United States, 1867-1960," Friedman and Schwartz delve into the historical data to show how changes in the money supply have influenced economic outcomes. By examining various episodes in American history, they demonstrate how the Federal Reserve's decisions on interest rates and money creation have had profound effects on inflation, output, and employment levels. Through their meticulous research and analysis, Friedman and Schwartz illustrate the importance of sound monetary policy in promoting stable economic growth. They argue that periods of excessive money creation have led to inflationary pressures, while periods of tight monetary policy have resulted in economic downturns. Moreover, they highlight the role of expectations and credibility in shaping the effectiveness of monetary policy. When the public believes that the central bank is committed to maintaining price stability, it can help anchor inflation expectations and promote economic stability.- "A Monetary History of the United States, 1867-1960" provides a comprehensive overview of how monetary policy decisions have shaped the economic performance of the United States. By studying the historical record, Friedman and Schwartz offer valuable insights into the relationship between monetary policy and economic outcomes, emphasizing the need for a disciplined and consistent approach to managing the money supply.
