A Quantity Theory Framework for Monetary Policy

13 Pages Posted: 9 Nov 2012

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 1993

Abstract

When the quantity theory is exposited in a way that takes account of the actual practice followed by monetary authorities of setting a target for the rate of interest, it provides a useful framework for understanding monetary policy procedures. The quantity theory also highlights the importance to the monetary authority of controlling the price level. The theory suggests monetary policy procedures that retain the use of the interest rate as a policy variable, but make the price level the monetary authority's objective.

Suggested Citation

Hetzel, Robert L., A Quantity Theory Framework for Monetary Policy (1993). FRB Richmond Economic Quarterly, vol. 79, no. 3, Summer 1993, pp. 35-47, Available at SSRN: https://ssrn.com/abstract=2129274

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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