Article: Quasi balance-sheet measures of U.S. monetary policy: a closer look.

Economists have a wide variety of financial variables and monetary aggregates they consider as indicators of U.S. monetary policy. Such a variable should provide both an accurate appraisal of the stance - the looseness or tightness - of monetary policy and the most reliable indication of future effects of policy on the economy. Saving (1967) suggests the former property is most relevant, arguing that the main purpose of an indicator is to signal the policy effect. The indicator may be subject to the same exogenous shocks as the target variable, but movements in the indicator should be dominated by changes in monetary policy. Applying Saving's definition, the primary ...

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