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Ricardo versus Thornton on the appropriate monetary response to supply shocks

  • Thomas M. Humphrey
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    David Ricardo (1772-1823) recommended countering supply shocks with monetary contraction. Henry Thornton (1760-1815) advised a constant-money response. Their views hinged (1) on the neutrality or non-neutrality of money-stock changes on real output and employment and (2) on the costs of inflation. These same considerations influence Federal Reserve policy in response to oil shocks today.

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    File URL: https://fraser.stlouisfed.org/docs/publications/frbrichreview/rev_frbrich199011.pdf
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    Article provided by Federal Reserve Bank of Richmond in its journal Economic Review.

    Volume (Year): (1990)
    Issue (Month): Nov ()
    Pages: 18-24

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    Handle: RePEc:fip:fedrer:y:1990:i:nov:p:18-24:n:v.76no.6
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    1. Matthew D. Shapiro, 1987. "Supply Shocks in Macroeconomics," NBER Working Papers 2146, National Bureau of Economic Research, Inc.
    2. Robert M. Solow, 1980. "What to Do (Macroeconomically) When OPEC Comes," NBER Chapters, in: Rational Expectations and Economic Policy, pages 249-267 National Bureau of Economic Research, Inc.
    3. Charles F. Peake, 1978. "Henry Thornton and the Development of Ricardo's Economic Thought," History of Political Economy, Duke University Press, vol. 10(2), pages 193-212, Summer.
    4. James C. W. Ahiakpor, 1985. "Ricardo on Money: The Operational Significance of the Non-Neutrality of Money in the Short Run," History of Political Economy, Duke University Press, vol. 17(1), pages 17-30, Spring.
    5. O'Brien, D P, 1981. "Ricardian Economics and the Economics of David Ricardo," Oxford Economic Papers, Oxford University Press, vol. 33(3), pages 352-86, November.
    6. Fischer, Stanley, 1985. "Supply Shocks, Wage Stickiness, and Accommodation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(1), pages 1-15, February.
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