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The Triumph of Monetarism?

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  • J. Bradford De Long

Abstract

The story of 20th century macroeconomics begins with Irving Fisher. In his books Appreciation and Interest (1896), The Rate of Interest (1907), and The Purchasing Power of Money (1911), Fisher fueled the intellectual fire that became known as monetarism. But what has happened to monetarism at the end of the 20th century? The short answer is that much of this current of thought is still there, but its insights pass under another name. We may not all be Keynesians now, but the influence of monetarism on how we all think about macroeconomics today has been deep, pervasive, and subtle. Why then do we today talk much more about the "New Keynesian" economists than about the "New Monetarist" economists? I believe that to answer this question we need to look at the history of monetarism over the 20th century. One fruitful way to look at the history of monetarism is to distinguish between four different variants or subspecies of monetarism that emerged and for a time flourished in the century just past: First Monetarism, Old Chicago Monetarism, High Monetarism, and Political Monetarism.

Suggested Citation

  • J. Bradford De Long, 2000. "The Triumph of Monetarism?," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 83-94, Winter.
  • Handle: RePEc:aea:jecper:v:14:y:2000:i:1:p:83-94
    Note: DOI: 10.1257/jep.14.1.83
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.14.1.83
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    References listed on IDEAS

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    1. Brunner, Karl & Meltzer, Allan H, 1972. "Friedman's Monetary Theory," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 837-851, Sept.-Oct.
    2. George S. Tavlas, 1998. "Was the Monetarist Tradition Invented?," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 211-222, Fall.
    3. Bennett T. McCallum, 1988. "Real Business Cycle Models," NBER Working Papers 2480, National Bureau of Economic Research, Inc.
    4. Milton Friedman, 1971. "A Theoretical Framework for Monetary Analysis," NBER Books, National Bureau of Economic Research, Inc, number frie71-1, January.
    5. Friedman, Milton, 1971. "A Monetary Theory of Nominal Income," Journal of Political Economy, University of Chicago Press, vol. 79(2), pages 323-337, March-Apr.
    6. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, April.
    7. Campbell, John Y., 1994. "Inspecting the mechanism: An analytical approach to the stochastic growth model," Journal of Monetary Economics, Elsevier, vol. 33(3), pages 463-506, June.
    8. Patinkin, Don, 1969. "The Chicago Tradition, the Quantity Theory, and Friedman," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 46-70, February.
    9. Johnson, Harry G, 1971. "The Keynesian Revolution and the Monetarist Counter-Revolution," American Economic Review, American Economic Association, vol. 61(2), pages 1-14, May.
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    Citations

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    Cited by:

    1. Haakon O. Aa. Solheim, 2005. "Evaluating Macroeconometric Modelling with Regard to Usefulness: a Survey," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 3-15.
    2. Mauricio Avella Gómez, 2007. "El Encaje Bancario en Colombia Perspectiva General," BORRADORES DE ECONOMIA 004327, BANCO DE LA REPÚBLICA.
    3. Scott Sumner, 2015. "Ideological Differences in Economics: Why Is the Left-Right Divide Widening?," Econ Journal Watch, Econ Journal Watch, vol. 12(1), pages 58-67, January.
    4. Colin Rogers, 2000. "Discussion of 'Inflation, Disinflation and the Natural Rate of Unemployment: A Dynamic Framework for Policy Analysis'," RBA Annual Conference Volume,in: David Gruen & Sona Shrestha (ed.), The Australian Economy in the 1990s Reserve Bank of Australia.
    5. Scott Sumner, 2015. "What Would Milton Friedman Have Thought of the Great Recession?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 74(2), pages 209-235, March.
    6. Mauricio Avella Gómez, 2007. "El encaje bancario en Colombia Perspectiva general," Borradores de Economia 470, Banco de la Republica de Colombia.
    7. Robert Dimand, 2002. "Patinkin on Irving Fisher's monetary economics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(2), pages 308-326.
    8. Nilss Olekalns, 2002. "The Teaching of First Year Economics in Australian Universities," Department of Economics - Working Papers Series 848, The University of Melbourne.
    9. Sylvie Rivot, 2015. "Rule-based frameworks in historical perspective: Keynes' and Friedman's monetary policies versus contemporary policy-rules," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 22(4), pages 601-633, August.
    10. W A Razzak, 2001. "Money in the era of inflation targeting," Reserve Bank of New Zealand Discussion Paper Series DP2001/02, Reserve Bank of New Zealand.

    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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