Mercantilists and Classicals: Insights from Doctrinal History

Abstract

Three centuries of events, episodes, and policy controversies reveal that certain classical theories of monetary policy have outperformed other theories whose superficial, albeit fallacious, logic makes them perennially popular with the general public, politicians, and even some policymakers. The doctrinal historian's job is to distinguish the robust from the fallacious theories so that central bankers can lock the former into place and thus avoid repeating past policy errors.