This paper and the following discussions by Albert Ando, Martin J. Bailey, and Alvin Marty were presented at a joint meeting of the American Finance Association and the Econometric Society in Pittsburgh, Pa., on December 29, 1962. The program was under the chairmanship of Eli Shapiro.
This paper is a part of our joint research on monetary theory and monetary policy. We wish to thank James Crotly for his excellent assistance, Michael Hamburger for his helpful discussions and Martin Bailey for his comments on an earlier draft. We acknowledge support to Karl Brunner from the National Science Foundation and from the Bureau of Business and Economic Research, U.C.L.A., and to Allan Meltzer from the Ford Foundation's Faculty Research Fellowship and the Graduate School of Industrial Administration, Carnegie Institute of Technology.