This paper develops a small, structural model of the United States economy and estimates that model with quarterly data on output, prices, and money from 1959 through 1995. The estimates reveal that the Federal Reserve has successfully insulated the economy from the effects of exogenous demand-side disturbances, so that most of the observed variation in aggregate output reflects the impact of supply-side shocks. Indeed, the model suggests that during the sample period, Federal Reserve policy has responded efficiently to these shocks, although the rate of inflation has been, on average, too high.