----------------- HES POSTING ----------------- Larry Moss is certainly correct that monetarism has both a limited meaning as some form of the quantity theory as well as a broader meaning as a whole constellation of pro-market, limited government ideas that "center on" the quantity theory. I believe that Thomas Mayer's _Structure of Monetarism_ (1979) (in its first 2 chapters) has the best treatment of the constellation of ideas that economists have pulled into the orbit of the term "monetarism". But I'm afraid it isn't quite as easy to pull these two definitions apart as Larry Moss suggests. The two countries that come to mind first for having tried monetarism (defined narrowly as monetary aggregate targeting to achieve a stable price level) and then having had to abandon it are the U.S. and the U.K. But in both cases, the implementation of monetary aggregate targeting was accompanied by financial market deregulation that would by any definition be a part of the broader definition of monetarism (pro-market, laissez faire). But what made it impossible to stick with the monetary aggregate targeting? One element of the problem was undoubtedly the very deregulation(s) that the adherents of monetarism had instituted as a part of their program(s). Thus, I don't believe that it is so easy to extract one definition of the term monetarism from the failure of another form of the idea that you want to privilege. What happened to "monetarism" in the public arena embodied both the definitions that Larry Moss suggests we consider. Now, as I pointed out in an earlier post, Brad DeLong has argued that monetarism's influence has been deep and pervasive despite the failure of monetary aggregate targeting. One can point, for instance, to the continued focus on inflation by central banks in the industrialized world, as well as the continued focus on lags in the effect of policy. But if there are parts of the original program of monetarism that still have purchase in the policy arena, this is not because some simple (or complex) form of monetarism still reigns. Ideas have continued to change and we now have the kind of arguments for "disciplined discretion" that one finds in the literature on inflation targeting. But inflation targeting is not monetarism. Something has happened to the ideas that economists use and that is what I propose we study. In particular, I propose that we examine the whole history of how and why monetarism rose to prominence, and why it fell. Whether we like it or not, that study involves both of the senses of monetarism that Larry Moss offers us. I think that the question of what remains of monetarism (e.g., concern with inflation, acknowledgement of the importance of time lags in the effect of policy) is a seperate question, but one that we won't be able to examine until we have better history of what happened to monetarism in the first place. One step at a time! Brad Bateman Grinnell College ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]