Knowledge that Transforms

FOR ALMOST TWO DECADES a virtually impenetrable curtain has separated two groups of monetary economists. One group has engaged in a learned and apparently interminable discussion concerned with the subtleties of Pigou effects, Lerner effects, and Keynesian effects, the existence or absence of money illusions, dichotomization of real and money prices, Hicksian weeks, and related esoterica. The other is ostensibly concerned with the "world's work", a range of interests that encompasses the details of monetary policy operations. Included among the subjects of discussion in recent years have been the nature of open market operations, their restriction to Treasury bills, the nature and timing of other Federal Reserve actions, the comparative advantages of ad hoc institutional devices, the possibilities of "twistÃng"* the yield curve, and similar issues.