Not All NGDP is Created Equal: A Critique of Market Monetarism
Journal of Private Enterprise 29(1) 2013: 41-52
13 Pages Posted: 14 Dec 2012 Last revised: 16 Aug 2014
Date Written: December 13, 2012
Market Monetarism, with its policy rule of NGDP targeting, has in common with free banking that both seek to avoid monetary disequilibrium. One might conclude that these are different approaches to achieving the same end. The purpose of this paper is to show that the proximate ends are in fact conceived differently: Stable NGDP as an object of choice by a central bank is different from NGDP as the emergent outcome of the market process. Furthermore, well-known insights on knowledge, the pricing process, and the institutional context of economic activity suggest that this difference has important implications.
Keywords: free banking, Market Monetarism, market process, monetary disequilibrium, monetary institutions, NGDP
JEL Classification: B53, E42, E50
Suggested Citation: Suggested Citation