The canonical history of macroeconomics, one of the rival schools of thought and the great economists, gives Robert Lucas a prominent role in shaping the recent developments in the area. According to it, his followers were initially split into two camps, the "real business cycle" theorists with...

The 1960s and the 1970s saw an intense debate about the optimal monetary policy instrument, to which Poole, in 1970, and Sargent and Wallace, in 1975, made seminal contributions. According to the practitioners' narrative, these authors popularized the use of quadratic loss functions in monetary...

Nowadays monetary economists derive optimal policies by solving a Ramsey problem. In this paper I explore the historical context in which this concept of optimality emerged. This approach developed from two ideas. First, economists characterized inflation as a tax on money holdings in the...