Category Archives: Monetary Theory

Friedrich Hayek endorsed the core of ‘NGDP targeting’ 3 years before the idea was ‘first proposed‘ by James Meade in 1978: “If I were responsible for the monetary policy of a country I would certainly try to prevent a threatening … Continue reading →

Let’s compare Stephen Williamson’s account of “New Monetarism” with Hayek’s account of the expansion and contraction of the supply of various types of monies, near monies, shadow monies, and money-substitute assets of changing liquidity. Here’s Williamson: A New Monetarist thinks … Continue reading →

In a paper written for the Adam Smith Institute (pdf). Quotable: George Selgin pointed out that NGDP targeting would produce lower than normal inflation during a productivity boom. One of the criticisms of inflation targeting is that because central banks … Continue reading →

Olivier Blanchard: Monetary policy has to go beyond inflation stability, adding output and financial stability to the list of targets, and adding macro-prudential measures to the list of instruments. Of course, Hayek established the fundamental significance of this point in … Continue reading →

“Stable monetary conditions require that the stream of money expenditure is the fixed datum to which prices and wages have to adapt themselves, and not the other way around.” — F. A. Hayek