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In this paper, I examine what I call Milton Friedman's Monetary Instability Hypothesis. Drawing on Friedman's work, I argue that there are two main components to this view. The first component is the idea that deviations between the public's demand for money and the supply of money are an...
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Sargent and Wallace (1981) published "Some Unpleasant Monetarist Arithmetic" 40 years ago. Their central message was that a central bank may not have the power to determine the long-run rate of inflation without fiscal support. In a policy regime where the fiscal authority is non-Ricardian, an...
Persistent link: https://www.econbiz.de/10013219615
Recent experience does not include a "monetarist experiment," as some have argued, but may slightly reinforce preexisting reasons for doubting that the best way of formulating monetarist policy prescriptions is in the form of a constant growth rule for the money stock.A more desirable rule would...
Persistent link: https://www.econbiz.de/10013221547
In this article, we are going to explain the difference between Keynesian and monetarist theory and add the Greek … terms of government spending and taxation. Keynesian has developed the liquidity preference theory. On the other hand …, monetarist focuses on controlling the money supply and inflation. They have developed the quantity theory of money. Keynesian are …
Persistent link: https://www.econbiz.de/10013232220
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...
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implications for monetary policy; and "super crowding out." Many considerations suggest that monetarism as theory and policy might … theory; the roles of stock .and flow variables and the stability of asset demand and expenditure functions; the relation …
Persistent link: https://www.econbiz.de/10013246292