Economics Dictionary of Arguments

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Monetary policy: Monetary policy is the set of tools used by a central bank to influence the money supply and interest rates in an economy. The goal of monetary policy is to achieve macroeconomic objectives such as price stability, full employment, and economic growth. See also Central bank, Money supply, Monetarism, Economic growth, Interest rates, Macroeconomics.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Milton Friedman on Monetary Policy - Dictionary of Arguments

Mause I 57
Monetary Policy/Friedman/FriedmanVsKeynesianism/FriedmanVsKeynes: Thesis: monetary policy can only achieve short-term success, but is neutral in the long term. Although expansionary monetary policy could initially increase demand and employment, workers would not be subject to monetary illusion and would demand a compensation for the inflation-related reduction in their real wages, i.e. an increase in nominal wages, which would cancel out the initial employment effect. In the long term, unemployment would therefore remain constant; monetary policy would only have caused prices to rise and would not have had any real employment effects. "Real" problems (e.g. unemployment) could only be solved by "real" measures (e.g. facilitating the recruitment of workers by relaxing employment protection, minimum wage and similar regulations). The monetarists therefore recommend a steady monetary policy with the objective of price stability.(1)

1. M. Friedman, The role of monetary policy. American Economic Review 58, 1968, pp. 1-17.
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Brocker I 398
Monetary Policy/Friedman: a steady monetary policy can eliminate the political and even make central banks superfluous. The aim is to expand the money supply moderately and regularly. In theory, it is sufficient for a banknote issuing office to set up a standing order for an amount x. FriedmanVsCentral Banks, FriedmanVsPolicy.
>Politics, >Federal Reserve Policy.

Peter Spahn, „Milton Friedman, Kapitalismus und Freiheit“, in: Manfred Brocker (Hg.) Geschichte des politischen Denkens. Das 20. Jahrhundert. Frankfurt/M. 2018

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Econ Fried I
Milton Friedman
The role of monetary policy 1968

Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

Brocker I
Manfred Brocker
Geschichte des politischen Denkens. Das 20. Jahrhundert Frankfurt/M. 2018

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