An Evaluation of Friedman's Monetary Instability Hypothesis.
In this article, I examine what I call Milton Friedman's Monetary Instability Hypothesis. Drawing on Friedman's work, I argue that there are two main components to this view. The first component is the idea that deviations between the public's demand for money and the supply of money are an importan...
| Publicado en: | Southern Economic Journal Vol. 83; no. 3; pp. 744 - 756 |
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| Formato: | Artículo |
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Wiley-Blackwell
Jan2017
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=120999909&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 120999909 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00384038 SEJ jtl: Southern Economic Journal issn: 00384038 maglogo: N pubinfo: dt: Jan2017 vid: 83 iid: 3 pid: 480 pub: Wiley-Blackwell artinfo: ui: 120999909 10.1002/soej.12177 ppf: 744 ppct: 12 formats: fmt: – @attributes: type: T – @attributes: type: P size: 129KB tig: atl: An Evaluation of Friedman's Monetary Instability Hypothesis. aug: au: Hendrickson, Joshua R. affil: Department of Economics, University of Mississippi, 229 North Hall, University, MS 38677, USA su: Business cycles Money Keynesian economics Supply & demand Economic demand sug: subj: Business cycles Money Keynesian economics Supply & demand Economic demand keyword: E32 E41 E51 E32 E41 E51 ab: In this article, I examine what I call Milton Friedman's Monetary Instability Hypothesis. Drawing on Friedman's work, I argue that there are two main components to this view. The first component is the idea that deviations between the public's demand for money and the supply of money are an important source of economic fluctuations. The second component of this view is that these deviations are primarily caused by fluctuations in the supply of money rather than the demand for money. Each of these components can be tested independently. To do so, I estimate an otherwise standard New Keynesian model, amended to include a money demand function consistent with Friedman's work and a money growth rule, for a period from 1875 to 1963. This structural model allows me to separately identify shocks to the money supply and shocks to money demand. I then use variance decompositions to assess the relative importance of shocks to the supply and demand for money. I find that shocks to the monetary base can account for up to 28% of the fluctuations in output whereas money demand shocks can account for less than 1% of such fluctuations. This provides support for Friedman's view. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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