Chapter 20 The optimum quantity of money
Milton's Friedman's doctrine regarding the optimum quantity of moneyaccording to which an optimal monetary policy would involve a steady contraction of the money supply at a rate sufficient to bring the nominal interest rate down to zerois one of the most celebrated propositions in modern monetary theory. The reasons for the degree of interest in Friedman's argument are not difficult to discern. Friedman deploys some simple ideas from the modern theory of competitive equilibrium that applies to the characterization of Pareto optimal allocation of resources and the interpretation of certain necessary conditions for efficiency in terms of equilibrium prices and rates of return. The conclusions that Friedman reaches are of apparent relevance to some of the most debated issues of practical economic policymaking, and his proposed policy rule is of such striking simplicity that its implications for practical policy are quite clear.
Year of publication: |
1990
|
---|---|
Authors: | Woodford, Michael |
Published in: |
Handbook of monetary economics : volume 2. - Amsterdam : North-Holland, ISBN 0-444-88026-7. - 1990, p. 1067-1152
|
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Friedman, Benjamin M.,
-
Optimal Monetary Stabilization Policy
Woodford, Michael,
-
Knowledge, Information, and Expectations in Modern Macroeconomics : In Honor of Edmund S. Phelps
Acemoglu, Daron, (2003)
- More ...