This paper by Ben S. Bernanke and Ilian Mihov develops and applies a Vector Autoregression (VAR) methodology to measure the stance of monetary policy. They propose a "semi-structural" VAR approach that extracts information about monetary policy from data on bank reserves and the federal funds rate while leaving the relationships among macroeconomic variables unrestricted. The methodology nests earlier VAR-based measures and can be used to compare and evaluate these indicators. The authors find that innovations to the federal funds rate (Bernanke-Blinder) are a good measure of policy innovations during the periods 1985-79 and 1988-94, while for the period 1979-94, innovations to the component of nonborrowed reserves orthogonal to total reserves (Strongin) seem to be the best choice. They also develop a new measure of policy stance that aligns well with qualitative indicators such as the Boschen-Mills index. The paper discusses the limitations of existing measures and provides a more comprehensive framework for understanding and evaluating monetary policy.This paper by Ben S. Bernanke and Ilian Mihov develops and applies a Vector Autoregression (VAR) methodology to measure the stance of monetary policy. They propose a "semi-structural" VAR approach that extracts information about monetary policy from data on bank reserves and the federal funds rate while leaving the relationships among macroeconomic variables unrestricted. The methodology nests earlier VAR-based measures and can be used to compare and evaluate these indicators. The authors find that innovations to the federal funds rate (Bernanke-Blinder) are a good measure of policy innovations during the periods 1985-79 and 1988-94, while for the period 1979-94, innovations to the component of nonborrowed reserves orthogonal to total reserves (Strongin) seem to be the best choice. They also develop a new measure of policy stance that aligns well with qualitative indicators such as the Boschen-Mills index. The paper discusses the limitations of existing measures and provides a more comprehensive framework for understanding and evaluating monetary policy.