The choice of a monetary policy framework: Lessons from the 1920s

Anyone who studies the early history of the Federal Reserve is bound to notice a singular curiosity. In the 1920s and early 1930s, when US gold holdings were sufficiently large to relax the constraint of the international gold standard and permit domestic control of the money stock and price level, the Fed deliberately shunned the best empirical policy framework that mainstream monetary science had to offer.