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Does monetarism retain relevance?

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  • Robert L. Hetzel

Abstract

Implicitly, central banks reject the propositions of monetarism. They do not characterize themselves as creators of money, but instead emphasize their role in influencing financial intermediation. They do not discuss monetary policy in terms of a rule, but instead use the language of discretion. They refer to the low level of interest rates to characterize monetary policy as stimulative despite low rates of growth of money and nominal gross domestic product. The question arises of whether monetarist ideas retain any relevance for central banks

Suggested Citation

  • Robert L. Hetzel, 2012. "Does monetarism retain relevance?," Economic Quarterly, Federal Reserve Bank of Richmond, issue 2Q, pages 77-110.
  • Handle: RePEc:fip:fedreq:y:2012:i:2q:p:77-110:n:v.98no.2
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    References listed on IDEAS

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    1. Laidler, David, 1981. "Monetarism: An Interpretation and an Assessment," Economic Journal, Royal Economic Society, vol. 91(361), pages 1-28, March.
    2. Marvin Goodfriend, 2000. "Overcoming the zero bound on interest rate policy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 1007-1057.
    3. McCallum, Bennett T., 1986. "Some issues concerning interest rate pegging, price level determinacy, and the real bills doctrine," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 135-160, January.
    4. Goodfriend, Marvin, 1987. "Interest rate smoothing and price level trend-stationarity," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 335-348, May.
    5. Mehra, Yash P., 2001. "The bond rate and estimated monetary policy rules," Journal of Economics and Business, Elsevier, vol. 53(4), pages 345-358.
    6. Hetzel, Robert L., 1995. "Why the price level wanders aimlessly," Journal of Economics and Business, Elsevier, vol. 47(2), pages 151-163, May.
    7. Hetzel,Robert L., 2008. "The Monetary Policy of the Federal Reserve," Cambridge Books, Cambridge University Press, number 9780521881326, May.
    8. Hetzel, Robert L & Mehra, Yash P, 1989. "The Behavior of Money Demand in the 1980s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 455-463, November.
    9. Hendrickson, Joshua R., 2012. "An overhaul of Federal Reserve doctrine: Nominal income and the Great Moderation," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 304-317.
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    Keywords

    Financial markets ; Monetary policy;

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