In Old Chicago: Simons, Friedman and the Development of Monetary-Policy Rules

37 Pages Posted: 22 Jan 2014

Multiple version iconThere are 2 versions of this paper

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

Tavlas, George, In Old Chicago: Simons, Friedman and the Development of Monetary-Policy Rules (January 1, 2014). Becker Friedman Institute for Research in Economics Working Paper No. 2014-02, Available at SSRN: https://ssrn.com/abstract=2382839 or http://dx.doi.org/10.2139/ssrn.2382839

George Tavlas (Contact Author)

Bank of Greece ( email )

21 E. Venizelos Avenue
GR-10250 Athens
Greece
+30 10 323 7224 (Phone)
+30 10 323 3025 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
100
Abstract Views
1,061
Rank
453,810
PlumX Metrics