Subsequent to the announced October 1979 policy shift, many economists voiced doubt about whether the Federal Reserve was sincerely committed to the execution of an NBR's targeting strategy. However, the charge that the central bank continued to accommodate as vigorously after the announced policy shift as before is not borne out by these results. Pre- and post-1979 comparisons of the FFR and NBR decompositions suggest a conscious policy alteration aimed at tightening control over NBR while allowing the FFR to respond to money market conditions. The evidence also indicates continuedM1 endogeneity in the second period, with feedback occurring between this variable and the FFR. While the measuredM1 aggregate used in the VAR's does not allow a precise identification of money demand forces, it is reasonable to relate this endogeneity to the erratic shifts in money demand which are known to have occurred over the 1979–82 period. Thus, while the analysis does indicate the central bank did alter its behavior with respect to the NBR policy instrument, the results do not show the Fed was able to control the volatility ofM1 over the NBR targeting period.