In old Chicago: Simons, Friedman and the development of monetary-policy rules
AbstractThis paper examines the different policy rules proposed by Henry Simons, who, beginning in the mid-1930s, advocated a price-level stabilization rule, and by Milton Friedman, who, beginning in the late-1950s, advocated a rule that targeted a constant growth rate of the money supply. Although both rules shared the objective of eliminating the policy uncertainty emanating from discretion, they differed because of the different views of Simons and Friedman about the stability of secular relationships. Simons' rule relates to modern rules which emphasize the pursuit of price stability as representing optimal monetary policy.
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Bibliographic InfoPaper provided by Bank of Greece in its series Working Papers with number 177.
Date of creation: Mar 2014
Date of revision:
Milton Friedman; Henry Simons; monetary-policy rules;
Find related papers by JEL classification:
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-18 (All new papers)
- NEP-CBA-2014-04-18 (Central Banking)
- NEP-HIS-2014-04-18 (Business, Economic & Financial History)
- NEP-HPE-2014-04-18 (History & Philosophy of Economics)
- NEP-MAC-2014-04-18 (Macroeconomics)
- NEP-MON-2014-04-18 (Monetary Economics)
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