Milton Friedman, for example, has always questioned the ability of central banks to stabilize output relative to potential and worried that attempting to do so could be counterproductive, given the "long and variable lags" between policy actions and the economic effects. Economists agree that monetary policy cannot "fine tune" the economy to ensure that the full employment objective is continuously maintained.
However, a considerable amount of research supports the contention that 7 monetary policy can reduce the variability of output around its full-employment level. 6  For a discussion of the case for price stability, see Fischer (1996). 7  Much of this research involves simulations of empirical macroeconomic models with alternative policy rules.