F.A. Hayek and his rational choice of monetary arrangements
AbstractThis paper addresses the perspective of Hayek’s doctrine on monetary arrangements in the economy and his favorable argument for an international central bank over national central bank. I also discussed Hayek’s view on free banking (i.e. for the free issue of bank notes) that would enable the banks to provide more and cheaper credit. Furthermore, Hayek comes up with an intellectual debate on “rational choice” of monetary arrangements whether the commercial banks should have the right to issue bank notes (demand for free banking) which can be redeemable in the established national gold or silver currency or an international central bank. This paper focuses on Hayek’s overall philosophy on international money mechanism and his intellectual debate of rational choice between the two arrangements – free banking or an international central bank and his concerned over unstable arrangements in money mechanism,which, he believes, profoundly affects economic and social conditions of people and government. Therefore, to reach the conclusion, I outlined Hayek’s perspectives on central bank and government, then international gold standard, and finally, his choice between free banking and an international central banking which is central theme of this paper.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39920.
Date of creation: 02 May 2012
Date of revision:
Money; Banking; Central Bank; Free Banking; Monetary Nationalism;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-23 (All new papers)
- NEP-HIS-2012-07-23 (Business, Economic & Financial History)
- NEP-HME-2012-07-23 (Heterodox Microeconomics)
- NEP-HPE-2012-07-23 (History & Philosophy of Economics)
- NEP-MAC-2012-07-23 (Macroeconomics)
- NEP-MON-2012-07-23 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- White, Lawrence H, 1999. "Hayek's Monetary Theory and Policy: A Critical Reconstruction," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(1), pages 109-20, February.
- repec:cto:journl:v:31:y:2011:i:3:p: is not listed on IDEAS
- Fabio Masini, 2012. "Designing the institutions of international liberalism: some contributions from the interwar period," Constitutional Political Economy, Springer, vol. 23(1), pages 45-65, March.
- Glasner,David, 2005. "Free Banking and Monetary Reform," Cambridge Books, Cambridge University Press, number 9780521022514, October.
- Lawrence H. White, 1999. "Why Didn't Hayek Favor Laissez Faire in Banking?," History of Political Economy, Duke University Press, vol. 31(4), pages 753-769, Winter.
- Lawrence H. White, 2011. "A Gold Standard with Free Banking Would Have Restrained the Boom and Bust," Cato Journal, Cato Journal, Cato Institute, vol. 31(3), pages 497-504, Fall.
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