Hayek’s early “Constant Total Money Stream” Target

Lawrence White:

“Hayek’s business cycle theory led him to the conclusion that intertemporal price equilibrium is best maintained in a monetary economy by constancy of “the total money stream,” or in Fisherian terms the money stock times its velocity of circulation, MV. Hayek was clear about his policy recommendations: the money stock M should vary to offset changes in the velocity of money V, but should be constant in the absence of changes in V.”

Quoted by Tom Clougherty in a blog post titled “Hayek and Monetary Stabilization”.

See also Lawrence White’s “Hayek’s Monetary Theory and Policy: A Critical Reconstruction.”

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