US Monetary Policy During The Greenspan Era

Essay by EssaySwap ContributorUniversity, Master's February 2008

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In my paper, I plan to discuss the conduct and performance of U.S. monetary policy during the tenure of current Fed Chairman, Alan Greenspan. I will focus on four main points. First, with the exception of a few rough spots, I will illustrate how macroeconomic performance of the Greenspan era has been nothing short of spectacular throughout his career as the Fed Chairman. I will focus primarily on the following macroeconomic indicators; inflation, unemployment, real growth and market performance. Second, I will explore the role that luck has played in Greenspan's success. Specifically focusing on how food and energy prices were "well-behaved" and the fact that productivity experienced somewhat unexpected growth. Third, I will discuss some of the recent criticisms that Greenspan has faced in light of the current economic conditions. Specifically, that monetary policy may have been too restrictive in 2000 when Greenspan made pre-emptive strikes against inflation despite warnings from the stock market and the business sector.

Finally, I will briefly explore how monetary policy has impacted Sherwin-Williams during the last ten to fifteen years.

In the past fifteen years, few U.S. policies have been hailed as successful as the monetary policy. For the most part, the economy has been healthy and vibrant, thanks in part to the work of the Federal Reserve and Alan Greenspan in particular. Up until the 3rd Quarter of this year, the U.S. economy had been experiencing the longest period of economic expansion in our history. Consumers, commerce, and the stock market alike, have shared in the admiration of Greenspan and the "magic" that he has been able to perform since his tenure began in 1987. During his run for the presidency, Senator John McCain echoed the sentiment of many Americans when he suggested that if anything were to happen to the...