Were Hayek?s Monetary Policy Recommendations Inconsistent?*

Martin Komrska () and Marek Hudík ()
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Martin Komrska: University of Economics, Prague
Marek Hudík: Centre for Theoretical Study, Charles University and Academy of Sciences, Prague

No 402133, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: Contrary to the received view, we maintain that Hayek?s monetary policy recommendations were not inconsistent. The prevalent perception of early Hayek as the money stream stabilizer and late Hayek as the price level stabilizer is attributable to an unjustified normative interpretation of Hayek?s positive analysis. We argue that in his contributions to monetary theory, Hayek took the goals of monetary policy as exogenously given and analysed the efficiency of different means to achieve these goals. Hayek?s allegedly inconsistent switch from being a critic to an advocate of price level stabilization is explained by a change in the issues on which he focused, rather than by a change in his theoretical views. We also claim that Hayek was always aware that every practical monetary policy involves difficult trade-offs and was thus reluctant to impose his own value judgments about what people should strive for.*We would like to thank Pavel Potu?ák for his helpful comments on an earlier draft. Any mistakes are, of course, ours.

Keywords: F. A. Hayek; monetary policy; Austrian business cycle theory; price level stabilization; money stream stabilization (search for similar items in EconPapers)
JEL-codes: B22 B31 B53 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2014-07
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe and nep-mon
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Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 306-315

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:0402133

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