Allan Meltzer: How He Underestimated His Own Contribution to the Modern Concept of a Central Bank

11 Pages Posted: 11 Jan 2018 Last revised: 7 Apr 2018

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2018-01-09

Abstract

In his great work A History of the Federal Reserve System, vol. 1, Allan Meltzer contended that monetary policymakers in the Depression simply ignored the quantity theoretic prescriptions that would have prevented contractionary monetary policy. Practically, he was arguing that the Fed should have accepted the responsibilities for economic stabilization now taken for granted with the modern concept of a central bank. In reality, decades of monetarist criticism had to pass before the Fed accepted both responsibility for the behavior of the price level and economic stabilization. In effect, Meltzer’s contention about the self-evident truth of quantity theory ideas ignored the monumental task that lay ahead for the monetarists.

Keywords: federal reserve system, central bank, monetary policy

JEL Classification: E5, N2

Suggested Citation

Hetzel, Robert L., Allan Meltzer: How He Underestimated His Own Contribution to the Modern Concept of a Central Bank (2018-01-09). FRB Richmond Working Paper No. 18-2, Available at SSRN: https://ssrn.com/abstract=3100064

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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