In Old Chicago: Simons, Friedman and the Development of Monetary-Policy Rules
37 Pages Posted: 22 Jan 2014
There are 2 versions of this paper
In Old Chicago: Simons, Friedman and the Development of Monetary-Policy Rules
In Old Chicago: Simons, Friedman and the Development of Monetary-Policy Rules
Date Written: January 1, 2014
Abstract
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.
Keywords: Milton Friedman, Henry Simons, monetary-policy rules
JEL Classification: B22, E52
Suggested Citation: Suggested Citation