----------------- HES POSTING ----------------- Brad Bateman wrote: > This is why I had suggested an "international" group; I was thinking of a > study of when and why monetarism had been adopted in different countries > and when why it was abandoned in its formulation as a theory of > macro-policy by monetary aggregate targeting. > I suggest that if such an international group were formed they take a moment to make a distinction between 1. "monetarism as a policy that uses the growth rates of one or more particular definitions of the money supply as an index of the ease or tightness of monetary policy" and "monetarism" as an orthodox response to those who find the quantity-theory tradition in economics insightful especially as it relates to the broader constraints and limitations on what is possible in the economy. For example, among the classical school writers the quantity tradition held that an overall rise in prices, initiated perhaps by a generalized rise in wages, would not stick unless the overall supply of cash (liquid) balances were increased as well. This doctrine applied to simple versions of hydraulic Keynesians (those who carried the "Keynesian cross" in academic teaching) suggest that increases in aggregate demand by themselves will not have the effects championed by their advocates unless the cash or liquid balances of the community were somehow simultaneously increased as well. This version of monetarism is a much more profound conceptual orientation about how the economy actually works, than whether or not a simple policy heuristic works or doesn't work to guide central bankers and business leaders when they make forecasts. I think it makes a big difference as to how we think of monetarism. In the case of Keynesianism matters are different. It was clear that this movement proclaimed that the orthodox description of how things worked was deeply flawed. Both the quantity theory tradition and Say's law were challenged along with the fundamental theorems of orthodox economics. In my view, monetarism is more than "money matters much" but instead a return and reaffirmation of orthodox methods or reasoning about the economy and its principal mechanisms and institutions. Laurence S. Moss ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]