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The author or concept searched is found in the following 2 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Quantity Theory | Friedman | Landsburg I 26 Def Quantity theory/Friedman/Landsburg: The quantity theory of money (…) is [the assumption] that prices tend to move in tandem with the money supply (…). Cf. >Irving Fisher, >Quantity theory, cf. >Equation of exchange. KeynesianismVsQuantity theory: After the onset of the Great Depression in the early 1930s, the new generation of "Keynesian" economists largely rejected the quantity theory, arguing that often, people don't have strong stable preferences about how much money they hold. Therefore, said the Keynesians, when the authorities inject new money into the system, people might simply hold it, without bidding up prices. Economic theoriesVsQuantity theory: Throughout the 1930s and 1940s, a smattering of economists, notably Henry Simons and Lloyd Mints at the University of Chicago, tended the fires of the quantity theory. Friedman: (…) Friedman's version(1) of the quantity theory was in fact highly original, far subtler, more insightful, and better designed for empirical testing. Friedman/Landsburg: 1 a) Over the 100-year period ending in 1960, there was remarkable stability in the amount of real purchasing power (e.g. " 10 weeks' income") that people want to hold in the form of money. The demand for real purchasing power does change over the course of that century, but mostly gradually and predictably. For example, when permanent incomes rise by 1 percent, the real purchasing power that people want to hold tends to rise predictably by about 1.8 percent. b) By contrast, when nonpermanent incomes rise, there is little change in the amount of money people want to hold. This is consistent with a theory that says that people hold money in order to buy things, and that (…) they want to buy more things only when their permanent incomes rise. >Permanent income hypothesis. This regularity in the data contrasts With the Keynesian View that the demand for money is erratic and inherently unpredictable. 2) VsKeneysianism: Because of that stability in demand, changes in the money supply do in fact lead to changes in the price level as predicted by the quantity theory. If you produce more money than people want, they'll try to get rid oft he excess and prices will rise. KeynesianismVsQuantity theory: The Keynesians had largely denied this; Friedman and Schwartz demonstrated that the evidence up to that time was on the side of the quantity theory. Landsburg I 27 3) Prices/time: When new money is injected into the system, it takes a while for prices to rise. Alice sells a paper clip to the government and thereby acquires a newly printed $ 5 bill, wants to get rid of it, tries to buy things, and bids up prices - but the process takes time, sometimes as long as two years. In the interim, especially if there happens to be a recession in progress, Alice's increased demand for goods encourages businesses to produce more goods. >Recession. (In the absence of a recession, businesses are likely to be near their peak capacities to begin with, so instead of increased production, you tend to get an accelerated increase in prices.) 4) Production/trade: Therefore, an increase in the money supply typically leads to an increase in economic activity (sometimes after a lag of many months), followed by a rise in prices and a return to the old level of activity (typically after a lag of many more months). Once again, this runs counter to the old Keynesian belief that new money is often simply held, and so has little effect on either prices or economic activity. Cf. >Money in circulation/Rothbard, >Recession/Friedman. 1. Milton Friedman and Anna Schwartz. (1963). Monetary History of the United States: 1867-1960. Princeton University Press. |
Econ Fried I Milton Friedman The role of monetary policy 1968 Landsburg I Steven E. Landsburg The Essential Milton Friedman Vancouver: Fraser Institute 2019 |
| Quantity Theory | Rothbard | Rothbard III 763 Quantity theory/Rothbard: RothbardVsQuantity theory: The absurdity of classifying monetary theories into mutually exclusive divisions (such as "supply and demand theory," "quantity theory," "cash balance theory," "commodity theory," "income and expenditure theory") should (…) be evident.(1) For all these elements are found in this analysis. Money is a commodity; its supply or quantity is important in determining its exchange-value; demand for money for the cash balance is also important for this purpose; and the analysis can be applied to income and expenditure situations. >Money/Rothbard, >Demand for money/Rothbard, >Purchasing power/Rothbard, >Currency in circulation/Rothbard, >Cash balance/Rothbard. 1. A typical such classification can be found in Lester V. Chandler, An Introduction to Monetary Theory (New York: Harper & Bros., 1940). |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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