During the late-1940s and the early-1950s Milton Friedman favored a rule under which fiscal policy would be used to generate changes in the money supply with the aim of stabilizing output at full employment. He believed that the economy is inherently unstable because of endogenous movements in...

This paper examines the different policy rules proposed by Henry Simons, who, beginning in the mid-1930s, advocated a price-level stabilization rule, and by Milton Friedman, who, beginning in the late-1950s, advocated a rule that targeted a constant growth rate of the money supply. Although both...

We discuss the development of policy rules at the University of Chicago and compare those rules with modern, Taylor-type rules. A key feature of the 1930s Chicago approach was the view that discretionary monetary policy has a destabilizing effect on the economy. Empirical confirmation of this...