Monetarist Principles and the Money Stock Growth Rule

Bennett McCallum

No 630, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Given the influence of Milton Friedman ,it is hard to keep from identifying "monetarisms" with the advocacy of a policy rule that would require the money stock to grow at a constant rate and prohibit cyclical adjustments in government spending or in tax schedules. This identification is somewhat inaccurate since Karl Brunner and Allan Meltzer, the other two leading proponents of monetarism, have not always been advocates of a constant money growth rate. It may nevertheless he useful to relate one's thoughts about monetarism to Friedman's rule, as will be done in this paper. But the question that immediately arises is, what more fundamental beliefs about the economy give rise to the idea that such a rule would be socially desirable. At this more basic level there may he more agreement among monetarists than about the rule itself. in any event, it appears that there are two basic monetarist propositions that are of crucial importance, as follows. (i) Cyclical and secular movements in nominal income are primarily attributable to movements in the stock of money relative to capacity output. (ii) There is no permanent tradeoff between unemployment and inflation or any other characteristic of the path of the price level -- that is, the natural rate of unemployment hypothesis is valid.

Date: 1981-02
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as McCallum, Bennett T. "Monetarist Principles and the Money Stock Growth Rule ." The American Economic Review, Vol. 71, No. 2, (May 1981), pp. 134-138.

Downloads: (external link)
http://www.nber.org/papers/w0630.pdf (application/pdf)

Related works:
Journal Article: Monetarist Principles and the Money Stock Growth Rule (1981)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:0630

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w0630

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().