An overhaul of Federal Reserve doctrine: Nominal income and the Great Moderation

► I argue that the Great Moderation can be explained by an overhaul of Federal Reserve doctrine. ► This position is supported by public and private statements by Arthur Burns. ► Empirical evidence provides additional support for the overhaul of doctrine hypothesis. ► Estimated policy rules can explain reduction in volatility of output and inflation. ► Fed as inflation creator rather than inflation fighter.