Money serves some very important functions in a market economy. Money undoubtedly improves economic efficiency by economizing on the costs of information (e.g., Brunner and Meltzer, 1971; King and Plosser, 1986). Money, without question, plays the dominant role in determining the rate of inflation. It also may be true that the Federal Reserve can and does manipulate the federal funds market on a day-to-day basis, although there is considerable question as to its ability to do so for sustained periods and what the consequences are. Yet it does not necessarily follow that money must be the prime impulse to business cycles. Nevertheless, a significant portion of the research in monetary economics over the past 25 years has been devoted to developing and exploring a monetary theory of the business cycle. These models seek to explain business cycles as arising from independent variations in the nominal quantity of money.