The Quantity Theory of Money claims to provide one of the few long-run guides to economic policy by providing specific numbers to characterise the correlation between money growth and inflation. Acceptance of the Quantity Theory has been greatly helped by the claim, propounded most effectively...

Hajo Riese (FU Berlin) was a pioneer of the "Berlin School of Monetary Keynesianism", particularly in the 1980s and 1990s. His research work was based on the roots of monetary theory in the work of J. M. Keynes, with a particular focus on the theory of capital and interest rates. While in Keynes...

Auf Inflation mit politischen Maßnahmen zur Stimulierung der Nachfrage zu reagieren, wirft Fragen auf, insbesondere wenn einflussreiche zeitgenössische Ökonomen wie Hans Werner Sinn dies unterstützen, indem sie den Konsum als wachstumsschädlich und unnötig für die Wirtschaft bezeichnen....

Hajo Riese (FU Berlin) was a pioneer of the "Berlin School of Monetary Keynesianism", particularly in the 1980s and 1990s. His research work was based on the roots of monetary theory in the work of J. M. Keynes, with a particular focus on the theory of capital and interest rates. While in Keynes...

The goal of this paper is twofold. First, we wish to better explain the relationship between Sargent and Wallace's (1981) unpleasant monetarist arithmetic, the closely connected fiscal theory of the price level (FTPL), and the monetarist view of inflation. Second, we discuss how the recent...

Auf Inflation mit politischen Maßnahmen zur Stimulierung der Nachfrage zu reagieren, wirft Fragen auf, insbesondere wenn einflussreiche zeitgenössische Ökonomen wie Hans Werner Sinn dies unterstützen, indem sie den Konsum als wachstumsschädlich und unnötig für die Wirtschaft bezeichnen....

This paper argues that the distinction between Keynesianism and Monetarism is not a useful frame for the debate on monetary policy during the past decade. The main driver of this debate is the secular decline in the real interest rates over the past four decades. It is more useful to distinguish...

To study implications of an interest-bearing CBDC on the economy, we integrate a New Monetarist-type decentralised market that explicitly accounts for the means-of-exchange function of bank deposits and CBDC into a New Keynesian model with financial frictions. The central bank influences the...

Modern mainstream macroeconomics treats the economy “as if” always in equilibrium. Two older traditions, Monetarism and the Wicksell Connections have always dissented, arguing that how agents gather information and apply it to the co-ordination of their activities are prior problems...

Classical law and economics is foundational to the American legal system. Centered at the University of Chicago, with a reach touching nearly every law faculty and economics department in the country, its assumptions, most especially that humans act both rationally and selfishly, informs the...

Milton Friedman’s longstanding advocacy in favor of floating exchange rates has contributed to a mistaken belief that he opposed currency board regimes or outright dollarization. Nothing could be further from the truth. Over a period of almost five decades Friedman consistently made it clear...

The objective of Ed Nelson’s two-volume book, Milton Friedman and Economic Debate in the United States, 1932-1972, is to provide an account of Friedman’s views in major monetary-policy debates during the period identified in the book’s title. Nelson tells the story of the development of...

Part I. Monetary Macroeconomics -- Chapter 1. Macro’s Missing Links. Exploring the Space between Monetarism and the Wicksell Connection (David Laidler) -- Chapter 2. The problems of inflation targeting originate in the monetary theory of Knut Wicksell (Lars Jonung) -- Chapter 3. Price...

The M2 money supply has grown by almost 40% since 2019. This number by itself raises the strong possibility that we have entered a new and remarkable era in United States monetary history. But what would Milton Friedman say? Drawing on Friedman’s writings and a fresh look at the data on money,...

Early in his career, Milton Friedman proposed a coordinated rules-based approach to monetary and fiscal policy, which he then abandoned for a simple constant money growth rule. Both rules were motivated by his goal of long-run economic stability and his belief that discretionary policy would be...

Most macroeconomics assumes that economic activity fluctuates above and below a sustainable growth rate. A more accurate alternative view is Milton Friedman’s plucking model, which posits that the economy either grows at its sustainable rate or experiences shortfalls rather than artificial...

As a leading monetarist economist, Milton Friedman revolutionized monetary theory in the 1950s and 1960s. Friedman’s views evolved somewhat later in his career. The case is made that had he not passed away in 2006 he would have supported the market monetarist approach to monetary during the...

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...

Milton Friedman's longstanding advocacy in favor of floating exchange rates has contributed to a mistaken belief that he opposed currency board regimes or outright dollarization. Nothing could be further from the truth. Over a period of almost five decades Friedman consistently made it clear...

This paper discusses monetarist objections to the IS-LM model. We explore the views of two principal spokesmen for monetarism: Milton Friedman and the team of Karl Brunner and Allan Meltzer. Friedman did not explicitly state the reasons he generally chose not to use the IS-LM model in rejecting...

Contrary to the conclusion of Sargent and Wallace, it is possible to exogenously and independently vary monetary and fiscal policy and retain steady-state equlibrium in economies like the United States. In particular,the central bank is not forced to monetize increased deficits either now or in...

In many countries, inflation has become less responsive to domestic factors and more responsive to global factors over the past decades. We introduce money and credit into the workhorse open-economy New Keynesian model. With this framework, we show that: (i) an efficient forecast of domestic...

Given the current state of technology, agents could potentially deal with exchange by transferring directly Central Bank fiat monies. Are we close to private banks becoming “technologically obsolete” in the provision of payment services?. To provide insights into this question, we build a...

Everybody knows that Chicago scholars dismissed predatory pricing as a practice of concern for antitrust law due to its alleged unprofitability, both relative and absolute. Many know that the dismissal dates back to the early years of the Chicago revolution in antitrust and has been reiterated...

This paper argues that Milton Friedman’s failed to recognize the asset bubbles leading up to the financial crisis of 2007-2008. It attributes this failure to the inductivist method that Friedman and Anna Schwartz used to formulate the quantity theory at the heart of the doctrine of monetarism....

This paper analyses the effects of an introduction of a retail central bank digital currency (CBDC) on bank intermediation in a tractable general equilibrium model with heterogeneous bank deposits and an imperfectly competitive loan market. The agents in the economy have preferences over holding...

"In 1979, Margaret Thatcher's new government pursued a monetarist economic policy in response to double-digit inflation, rising unemployment and flatlining economic growth. Tim Lankester's insider's account offers fascinating insights into one of Britain's most unsuccessful economic episodes and...

The coronavirus pandemic of 2019-20 confronted fiscally dominant regimes around the world with the question of whether the large deficits caused by the health crisis should be monetized or financed by issuing debt. The unpleasant monetarist arithmetic of Sargent and Wallace (1981) states that in...

Mark Ramseyer has been a leading force in bringing to bear the methods of Law and Economics to an increasingly ambitious analysis of the Japanese legal and economic systems. He has deliberately assumed an iconoclastic position in debunking a number of widely-held beliefs about Japan. More...