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In old Chicago: Simons, Friedman and the development of monetary-policy rules

Listed author(s):
  • George S. Tavlas

    ()

    (Bank of Greece)

This 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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File URL: http://www.bankofgreece.gr/BogEkdoseis/Paper2014177.pdf
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Paper provided by Bank of Greece in its series Working Papers with number 177.

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Length: 35
Date of creation: Mar 2014
Handle: RePEc:bog:wpaper:177
Contact details of provider: Web page: http://www.bankofgreece.gr

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  13. George S. Tavlas, 1998. "Was the Monetarist Tradition Invented?," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 211-222, Fall.
  14. Tavlas, George S., 1981. "Keynesian and monetarist theories of the monetary transmission process : Doctrinal aspects," Journal of Monetary Economics, Elsevier, vol. 7(3), pages 317-337.
  15. David Laidler & Roger Sandilands, 2002. "An Early Harvard Memorandum on Anti-Depression Policies: An Introductory Note," History of Political Economy, Duke University Press, vol. 34(3), pages 515-532, Fall.
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  19. Friedman, Milton, 1972. "Comments on the Critics," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 906-950, Sept.-Oct.
  20. Orphanides, Athanasios, 2003. "The quest for prosperity without inflation," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 633-663, April.
  21. Robert L. Hetzel, 1985. "The rules verses discretion debate over monetary policy in the 1920s," Economic Review, Federal Reserve Bank of Richmond, issue Nov, pages 3-14.
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  24. Edward Nelson, 2007. "Milton Friedman and U.S. monetary history: 1961-2006," Review, Federal Reserve Bank of St. Louis, issue May, pages 153-182.
  25. Thomas M. Humphrey, 1997. "Fisher and Wicksell on the quantity theory," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 71-90.
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  28. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
  29. Hugh Rockoff, 2000. "Henry Calvert Simons and the Quantity Theory of Money," Departmental Working Papers 200003, Rutgers University, Department of Economics.
  30. George S. Tavlas, 2011. "Two Who Called the Great Depression: An Initial Formulation of the Monetary‐Origins View," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 565-574, 03.
  31. Edward Nelson, 2008. "Friedman and Taylor on monetary policy rules: a comparison," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 95-116.
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