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monetary economics Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions (such as medium of exchange, store of value and unit of account), and ...
, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly proportional to the amount of money in circulation, or
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...
. For example, if the amount of money in an economy doubles, QTM predicts that price levels will also double. The theory was originally formulated by Renaissance mathematician
Nicolaus Copernicus Nicolaus Copernicus (; pl, Mikołaj Kopernik; gml, Niklas Koppernigk, german: Nikolaus Kopernikus; 19 February 1473 – 24 May 1543) was a Renaissance polymath, active as a mathematician, astronomer, and Catholic canon, who formulat ...
in 1517, and was influentially restated by philosophers
John Locke John Locke (; 29 August 1632 – 28 October 1704) was an English philosopher and physician, widely regarded as one of the most influential of Enlightenment thinkers and commonly known as the "father of liberalism". Considered one of ...
,
David Hume David Hume (; born David Home; 7 May 1711 NS (26 April 1711 OS) – 25 August 1776) Cranston, Maurice, and Thomas Edmund Jessop. 2020 999br>David Hume" '' Encyclopædia Britannica''. Retrieved 18 May 2020. was a Scottish Enlightenment ph ...
,
Jean Bodin Jean Bodin (; c. 1530 – 1596) was a French jurist and political philosopher, member of the Parlement of Paris and professor of law in Toulouse. He is known for his theory of sovereignty. He was also an influential writer on demonology. Bo ...
. The theory experienced a large surge in popularity with economists Anna Schwartz and Milton Friedman's book '' A Monetary History of the United States,'' published in 1963. The theory was challenged by Keynesian economists,Minsky, Hyman P. ''John Maynard Keynes'', McGraw-Hill. 2008. p.2. but updated and reinvigorated by the monetarist school of economics, led by economist
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold. Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.


Origins and development

The quantity theory descends from
Nicolaus Copernicus Nicolaus Copernicus (; pl, Mikołaj Kopernik; gml, Niklas Koppernigk, german: Nikolaus Kopernikus; 19 February 1473 – 24 May 1543) was a Renaissance polymath, active as a mathematician, astronomer, and Catholic canon, who formulat ...
, followers of the School of Salamanca like Martín de Azpilicueta,
Jean Bodin Jean Bodin (; c. 1530 – 1596) was a French jurist and political philosopher, member of the Parlement of Paris and professor of law in Toulouse. He is known for his theory of sovereignty. He was also an influential writer on demonology. Bo ...
, Henry Thornton, and various others who noted the increase in prices following the import of gold and silver, used in the coinage of money, from the
New World The term ''New World'' is often used to mean the majority of Earth's Western Hemisphere, specifically the Americas."America." ''The Oxford Companion to the English Language'' (). McArthur, Tom, ed., 1992. New York: Oxford University Press, p. ...
. The "equation of exchange" relating the supply of money to the value of money transactions was stated by
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
who expanded on the ideas of
David Hume David Hume (; born David Home; 7 May 1711 NS (26 April 1711 OS) – 25 August 1776) Cranston, Maurice, and Thomas Edmund Jessop. 2020 999br>David Hume" '' Encyclopædia Britannica''. Retrieved 18 May 2020. was a Scottish Enlightenment ph ...
. The quantity theory was developed by
Simon Newcomb Simon Newcomb (March 12, 1835 – July 11, 1909) was a Canadian–American astronomer, applied mathematician, and autodidactic polymath. He served as Professor of Mathematics in the United States Navy and at Johns Hopkins University. Born in N ...
, Alfred de Foville,
Irving Fisher Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, eugenicist and progressive social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt de ...
, and
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
, although the latter believed demand for money was also a significant factor, in the late 19th and early 20th century. Henry Thornton introduced the idea of a central bank after the financial panic of 1793. The concept of a modern central bank was, however, not given much attention until Keynes published '' A Tract on Monetary Reform'' in 1923. In 1802, Thornton published '' An Enquiry into the Nature and Effects of the Paper Credit of Great Britain'' in which he gave an account of his theory regarding the central bank's ability to control price level. According to his theory, it could control the currency in circulation through bookkeeping. This control could then allow it command of the money supply of the country. That ultimately would lead to central banks' ability to control price levels. Thornton's work was a major contribution to the quantity theory of money.
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
modified it by arguing that the
labor theory of value The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of " socially necessary labor" required to produce it. The LTV is usually associated with Marxian ...
requires that prices, under equilibrium conditions, are determined by socially necessary labor time needed to produce the commodity and that quantity of money was a function of the quantity of commodities, the prices of commodities, and the velocity. Marx did not reject the basic concept of the Quantity Theory of Money, but rejected the notion that each of the four elements were equal, and instead argued that the quantity of commodities and the price of commodities are the determinative elements and that the volume of money follows from them. He argued...
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
, like Marx, accepted the theory in general and wrote... Also like Marx he believed that the theory was misrepresented. Where Marx argues that the amount of money in circulation is determined by the quantity of goods times the prices of goods Keynes argued the amount of money was determined by the purchasing power or aggregate demand. He wrote In the Tract on Monetary Reform (1923), Keynes developed his own quantity equation: n = p(k + rk'),where n is the number of "currency notes or other forms of cash in circulation with the public", p is "the index number of the cost of living", and r is "the proportion of the bank's potential liabilities (k') held in the form of cash." Keynes also assumes "...the public,(k') including the business world, finds it convenient to keep the equivalent of k consumption in cash and of a further available k' at their banks against cheques..." So long as k, k', and r do not change, changes in n cause proportional changes in p. Keynes however notes... Keynes thus accepts the Quantity Theory as accurate over the long-term but not over the short term. Keynes remarks that contrary to contemporaneous thinking, velocity and output were not stable but highly variable and as such, the quantity of money was of little importance in driving prices."The Counter-Revolution in Monetary Theory", Milton Friedman (IEA Occasional Paper, no. 33 Institute of Economic Affairs. First published by the Institute of Economic Affairs, London, 1970.) The theory was influentially restated by
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
in response to the work of
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
and Keynesianism. Friedman understood that Keynes was like Friedman, a "quantity theorist" and that Keynes Revolution "was from, as it were, within the governing body", i.e. consistent with previous Quantity Theory. Friedman notes the similarities between his views and those of Keynes when he wrote... Friedman notes that Keynes shifted the focus away from the quantity of money (Fisher's M and Keynes' n) and put the focus on price and output. Friedman writes... The Monetarist counter-position was that contrary to Keynes, velocity was not a passive function of the quantity of money but it can be an independent variable. Friedman wrote: Thus while Marx, Keynes, and Friedman all accepted the Quantity Theory, they each placed different emphasis as to which variable was the driver in changing prices. Marx emphasized production, Keynes income and demand, and Friedman the quantity of money. Academic discussion remains over the degree to which different figures developed the theory. For instance, Bieda argues that Copernicus's observation amounts to a statement of the theory, while other economic historians date the discovery later, to figures such as
Jean Bodin Jean Bodin (; c. 1530 – 1596) was a French jurist and political philosopher, member of the Parlement of Paris and professor of law in Toulouse. He is known for his theory of sovereignty. He was also an influential writer on demonology. Bo ...
,
David Hume David Hume (; born David Home; 7 May 1711 NS (26 April 1711 OS) – 25 August 1776) Cranston, Maurice, and Thomas Edmund Jessop. 2020 999br>David Hume" '' Encyclopædia Britannica''. Retrieved 18 May 2020. was a Scottish Enlightenment ph ...
, and
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
. The quantity theory of money preserved its importance even in the decades after Friedmanian
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
had occurred. In
new classical macroeconomics New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous foundat ...
the quantity theory of money was still a doctrine of fundamental importance, but Robert E. Lucas and other leading new classical economists made serious efforts to specify and refine its theoretical meaning. For new classical economists, following
David Hume David Hume (; born David Home; 7 May 1711 NS (26 April 1711 OS) – 25 August 1776) Cranston, Maurice, and Thomas Edmund Jessop. 2020 999br>David Hume" '' Encyclopædia Britannica''. Retrieved 18 May 2020. was a Scottish Enlightenment ph ...
's famous essay "Of Money", money was not neutral in the short-run, so the quantity theory was assumed to hold only in the long-run. These theoretical considerations involved serious changes as to the scope of countercyclical economic policy. Historically, the main rival of the quantity theory was the real bills doctrine, which says that the issue of money does not raise prices, as long as the new money is issued in exchange for assets of sufficient value.


Fisher's equation of exchange

In its modern form, the quantity theory builds upon the following definitional relationship. :M\cdot V_T =\sum_ (p_i\cdot q_i)=\mathbf^\mathrm\mathbf where :M\, is the total amount of
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money ar ...
in circulation on average in an economy during the period, say a year. :V_T\, is the transactions velocity of money, that is the average frequency across all transactions with which a unit of money is spent. This reflects availability of financial institutions, economic variables, and choices made as to how fast people turn over their money. :p_i\, and q_i\, are the price and quantity of the i-th transaction. :\mathbf is a column vector of the p_i\,, and the superscript T is the
transpose In linear algebra, the transpose of a matrix is an operator which flips a matrix over its diagonal; that is, it switches the row and column indices of the matrix by producing another matrix, often denoted by (among other notations). The tr ...
operator. :\mathbf is a column vector of the q_i\,. Mainstream economics accepts a simplification, the
equation of exchange In monetary economics, the equation of exchange is the relation: :M\cdot V = P\cdot Q where, for a given period, :M\, is the total money supply in circulation on average in an economy. :V\, is the velocity of money, that is the average frequency w ...
: :M\cdot V_T = P_T\cdot T where :P_T is the price level associated with transactions for the economy during the period :T is an index of the real value of aggregate transactions. The previous equation presents the difficulty that the associated data are not available for all transactions. With the development of national income and product accounts, emphasis shifted to national-income or final-product transactions, rather than gross transactions. Economists may therefore work where :V is the velocity of money in final expenditures. :Q is an index of the real value of final expenditures. As an example, M might represent currency plus deposits in checking and savings accounts held by the public, Q real output (which equals real expenditure in macroeconomic equilibrium) with P the corresponding price level, and P\cdot Q the nominal (money) value of output. In one empirical formulation, velocity was taken to be "the ratio of net national product in current prices to the money stock". Thus far, the theory is not particularly controversial, as the equation of exchange is an identity. A theory requires that assumptions be made about the causal relationships among the four variables in this one equation. There are debates about the extent to which each of these variables is dependent upon the others. Without further restrictions, the equation does not require that a change in the money supply would change the value of any or all of P, Q, or P\cdot Q. For example, a 10% increase in M could be accompanied by a change of 1/(1 + 10%) in V, leaving P\cdot Q unchanged. The quantity theory postulates that the primary causal effect is an effect of ''M'' on ''P''.


Cambridge approach

Economists
Alfred Marshall Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist, and was one of the most influential economists of his time. His book '' Principles of Economics'' (1890) was the dominant economic textbook in England for many years. I ...
,
A.C. Pigou Arthur Cecil Pigou (; 18 November 1877 – 7 March 1959) was an English economist. As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chair ...
, and
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
(before he developed his own, eponymous school of thought) associated with
Cambridge University , mottoeng = Literal: From here, light and sacred draughts. Non literal: From this place, we gain enlightenment and precious knowledge. , established = , other_name = The Chancellor, Masters and Schola ...
, took a slightly different approach to the quantity theory, focusing on money demand instead of money supply. They argued that a certain portion of the money supply will not be used for transactions; instead, it will be held for the convenience and security of having cash on hand. This portion of cash is commonly represented as ''k'', a portion of nominal income (P \cdot Y). The Cambridge economists also thought wealth would play a role, but wealth is often omitted for simplicity. The Cambridge equation is thus: :M^=\textit \cdot P\cdot Y Assuming that the economy is at equilibrium (M^ = M), Y is
exogenous In a variety of contexts, exogeny or exogeneity () is the fact of an action or object originating externally. It contrasts with endogeneity or endogeny, the fact of being influenced within a system. Economics In an economic model, an exogen ...
, and ''k'' is fixed in the short run, the Cambridge equation is equivalent to the equation of exchange with velocity equal to the inverse of ''k'': :M\cdot\frac = P\cdot Y The Cambridge version of the quantity theory led to both Keynes's attack on the quantity theory and the Monetarist revival of the theory. Monge (2021) showed that the
Cambridge equation The Cambridge equation formally represents the Cambridge cash-balance theory, an alternative approach to the classical quantity theory of money. Both quantity theories, Cambridge and classical, attempt to express a relationship among the amount o ...
comes from a Cobb-Douglas utility function, which demonstrates that, in classical quantity theory, money has diminishing marginal utility (then, inflation is a monetary phenomenon).


Evidence

As restated by Milton Friedman, the quantity theory emphasizes the following relationship of the nominal value of expenditures PQ and the price level P to the quantity of money M : :(1) PQ=(\oversetM) :(2) P=(\oversetM) The plus signs indicate that a change in the money supply is hypothesized to change nominal expenditures and the price level in the same direction (for other variables held constant). Friedman described the
empirical Empirical evidence for a proposition is evidence, i.e. what supports or counters this proposition, that is constituted by or accessible to sense experience or experimental procedure. Empirical evidence is of central importance to the sciences and ...
regularity of substantial changes in the quantity of money and in the level of prices as perhaps the most-evidenced economic phenomenon on record.
Empirical Empirical evidence for a proposition is evidence, i.e. what supports or counters this proposition, that is constituted by or accessible to sense experience or experimental procedure. Empirical evidence is of central importance to the sciences and ...
studies have found relations consistent with the
models A model is an informative representation of an object, person or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin ''modulus'', a measure. Models c ...
above and with causation running from money to prices. The short-run relation of a change in the money supply in the past has been relatively more associated with a change in real output Q than the price level P in (1) but with much variation in the precision, timing, and size of the relation. For the ''long''-run, there has been stronger support for (1) and (2) and no systematic association of Q and M. Friedman also developed the "Money Multiplier", which demonstrated how much a change in the reserve ratio of banks would change the money supply. In the formula, RR represents the reserve ratio, while MM represents the money multiplier. MM=1\div RR


Principles

The theory above is based on the following hypotheses: # The source of
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
is fundamentally derived from the growth rate of the money supply. # The supply of money is
exogenous In a variety of contexts, exogeny or exogeneity () is the fact of an action or object originating externally. It contrasts with endogeneity or endogeny, the fact of being influenced within a system. Economics In an economic model, an exogen ...
. # The demand for money, as reflected in its velocity, is a stable function of nominal
income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. Fo ...
,
interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, t ...
s, and so forth. # The mechanism for injecting money into the economy is not that important in the long run. # The real interest rate is determined by non-monetary factors: (
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
of
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
, time preference).


Decline of money-supply targeting

An application of the quantity-theory approach aimed at removing
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
as a source of macroeconomic instability was to target a constant, low growth rate of the money supply. Still, practical identification of the relevant
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...
, including measurement, was always somewhat controversial and difficult. As financial intermediation grew in complexity and sophistication in the 1980s and 1990s, it became more so. To mitigate this problem, some
central banks A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
, including the U.S.
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, which had targeted the money supply, reverted to targeting interest rates. Starting 1990 with New Zealand, more and more central banks started to communicate inflation targets as the primary guidance for the public. Reasons were that interest targeting turned out to be a less effective tool in low-interest phases and it did not cope with the public uncertainty about future inflation rates to expect. The communication of inflation targets helps to anchor the public inflation expectations, it makes central banks more accountable for their actions, and it reduces economic uncertainty among the participants in the economy. But monetary aggregates remain a leading economic indicator. with "some evidence that the linkages between money and economic activity are robust even at relatively short-run frequencies."


Criticisms

Knut Wicksell Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought. He was married to t ...
criticized the quantity theory of money, citing the notion of a "pure credit economy".
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
criticized the quantity theory of money in his book '' The General Theory of Employment, Interest and Money''. Keynes had originally been a proponent of the theory, but he presented an alternative in the ''General Theory''. Keynes argued that the price level was not strictly determined by the money supply. Changes in the money supply could have effects on real variables like output.
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
agreed that there was a core of truth in the quantity theory, but criticized its focus on the supply of money without adequately explaining the demand for money. He said the theory "fails to explain the mechanism of variations in the value of money".Ludwig von Mises (1912)
"The Theory of Money and Credit (Chapter 8, Sec 6)"
In his book '' The Denationalisation of Money'',
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
described the quantity theory of money "as no more than a useful rough approximation to a really adequate explanation". According to him, the theory "becomes wholly useless where several concurrent distinct kinds of money are simultaneously in use in the same territory."


See also

* Classical dichotomy *
Credit theory of money Credit theories of money, also called debt theories of money, are monetary economic theories concerning the relationship between credit and money. Proponents of these theories, such as Alfred Mitchell-Innes, sometimes emphasize that money and ...
* Cumulative process * Demand for money *
Equation of exchange In monetary economics, the equation of exchange is the relation: :M\cdot V = P\cdot Q where, for a given period, :M\, is the total money supply in circulation on average in an economy. :V\, is the velocity of money, that is the average frequency w ...
*
Guanzi (text) The ''Guanzi'' () is an ancient Chinese political and philosophical text. At over 135,000 characters long, the ''Guanzi'' is one of the longest early Chinese philosophical texts. This anonymously written foundational text covers broad subject m ...
* Income velocity of money * Liquidity preference * Metallism **
Bimetallism Bimetallism, also known as the bimetallic standard, is a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed rate of exchange betw ...
*
Modern Monetary Theory Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox * * * * * * macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply ...
* " Monetae cudendae ratio" *
Monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
*
Monetary inflation Monetary inflation is a sustained increase in the money supply of a country (or currency area). Depending on many factors, especially public expectations, the fundamental state and development of the economy, and the transmission mechanism, it ...
*
Monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
* Neutrality of money


Alternative theories

* Benjamin Anderson (a critic of mainstream variant) * Fiscal theory of the price level * Real bills doctrine


References


Further reading


Fisher Irving, The Purchasing Power of Money, 1911 (PDF, Duke University)
* Friedman, Milton (1987 008. "quantity theory of money", '' The New Palgrave: A Dictionary of Economics'', v. 4, pp. 3–20
Abstract.
Arrow-page searchabl
preview
at John Eatwell et al.(1989), ''Money: The New Palgrave'', pp. 1–40. * * Humphrey, Thomas M.(1974). ''The Quantity Theory of Money: Its Historical Evolution and Role in Policy Debates''. FRB Richmond Economic Review, Vol. 60, May/June 1974, pp. 2–19. Available at SRN: http://ssrn.com/abstract=2117542* Laidler, David E.W. (1991). ''The Golden Age of the Quantity Theory: The Development of Neoclassical Monetary Economics, 1870–1914''. Princeton UP
Description
an
review.
* * * Mises, Ludwig Heinrich Edler von; ''Human Action: A Treatise on Economics'' (1949), Ch. XVII "Indirect Exchange", §4. "The Determination of the Purchasing Power of Money". *Friedman, Schwartz, 1963, ''A Monetary History of the United States'' *


External links

* The Quantity Theory of Money from
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
through
Irving Fisher Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, eugenicist and progressive social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt de ...
from the New School
"Quantity theory of money" at Formularium.org
– calculate M, V, P and Q with your own values to understand the equation

from Aplia Econ Blog {{DEFAULTSORT:Quantity Theory Of Money Monetary economics Business cycle theories