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Monetarist, Keynesian and Quantity Theories

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  2. Economics, Finance, Business & Management
  3. Credit and Capital Markets – Kredit und Kapital
  4. Vol. 10, Issue 2
  5. pp. 149–182

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Meltzer, A. Monetarist, Keynesian and Quantity Theories. Credit and Capital Markets – Kredit und Kapital, 10(2), 149-182. https://doi.org/10.3790/ccm.10.2.149
Meltzer, Allan H. "Monetarist, Keynesian and Quantity Theories" Credit and Capital Markets – Kredit und Kapital 10.2, 1977, 149-182. https://doi.org/10.3790/ccm.10.2.149
Meltzer, Allan H. (1977): Monetarist, Keynesian and Quantity Theories, in: Credit and Capital Markets – Kredit und Kapital, vol. 10, iss. 2, 149-182, [online] https://doi.org/10.3790/ccm.10.2.149
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Monetarist, Keynesian and Quantity Theories

Meltzer, Allan H.

Credit and Capital Markets – Kredit und Kapital, Vol. 10 (1977), Iss. 2 : pp. 149–182

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.10.2.149
Language
Multiple languages
Pages
34

Meltzer, Allan H.

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Abstract

Monetarist, Keynesian and Quantity Theories

Monetarism is neither the quantity theory rediscovered nor Keynesian theory rewritten. Thomas Mayer’s summary of monetarist propositions* captures much of the spirit as well as the substance of monetarist proposition about aggregate policy in a closed economy and brings out similarities and differences between monetarist and Keynesian theories. The formal similarity between monetarist and modern Keynesian theory is the result of development of both theories to a point at which the remaining differences are empirical. This is the position taken, in one way or another, by Thomas Mayer and most of the commentators on his paper. The paper traces many of the principal differences between monetarist, Keynesian and quantity theories to three related sources. One is the role of relative and absolute prices in the process of adjusting from one equilibrium position to the next. A second is the effect of fluctuations in real income, changes in risk and anticipations on relative prices including the prices of real and nominal assets. A third is the meaning and interpretation of fluctuations in output and employment. The last is a principal difference leading to differences in the policy recommendations by economists identified as Keynesian and monetarists. Monetarist interpretations of fluctuations in employment and output start from the model of time preference that underlies much of economic theory. The model distinguishes between anticipated income and current receipts or, in Friedman’s version between permanent and transitory income. This model suggests a very different interpretation of unemployment than the Keynesian theory, in old or new forms, where all cyclical unemployment is regarded as “involuntary”. Some implications of the “permanent income theory” are drawn, and there is discussion of evidence that could discriminate between alternative theories of unemployment.

Table of Contents

Section Title Page Action Price
Allan H. Meltzer: Monetarist, Keynesian and Quantity Theories 34
I. Adjustment in Monetarist and Quantity Theories 38
II. Interpreting Unemployment 50
III. Conclusion 61
Bibliography 62
Zusammenfassung: Monetaristische, Keynesianische und Quantitäts-Theorien 64
Summary: Monetarist, Keynesian and Quantity Theories 65
Résumé: Théories monétaristes, keynesiennes et quantitatives 66

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