Monetary policy: Change, lessons, and prescriptions for the 1990s

Substantial change in the financial environment in recent years has altered the way in which monetary policy impacts the economy. Policymakers have learned important lessons about monetary policy during this period. These changes and relevant policy lessons are reviewed. A market price or Wicksellian approach to monetary policy is then described. The approach is quite adaptable and works particularly well both in a changing environment and under alternative institutional arrangements. It offers a promising approach to monetary policy in the 1990s.