monetarism

(redirected from Monetary economics)
Also found in: Dictionary, Thesaurus, Financial, Wikipedia.

monetarism,

economic theory that monetary policy, or control of the money supply, is the primary if not sole determinant of a nation's economy. Monetarists believe that management of the money supply to produce credit ease or restraint is the chief factor influencing inflationinflation,
in economics, persistent and relatively large increase in the general price level of goods and services. Its opposite is deflation, a process of generally declining prices. The U.S.
..... Click the link for more information.
 or deflation, recession (see depressiondepression,
in economics, period of economic crisis in commerce, finance, and industry, characterized by falling prices, restriction of credit, low output and investment, numerous bankruptcies, and a high level of unemployment.
..... Click the link for more information.
) or growth; they dismiss fiscal policy (government spending and taxation) as ineffective in regulating economic performance. Milton FriedmanFriedman, Milton
, 1912–2006, American economist, b. New York City, Ph.D. Columbia, 1946. Friedman was influential in helping to revive the monetarist school of economic thought (see monetarism).
..... Click the link for more information.
 was the leading modern proponent for monetarism.

monetarism

a school of thought in economics and in politics that sees control of the money supply as the key to the management of the economy Monetarists emphasize the need to match the supply of money (including credit) to the capacity of the economy to produce goods and services, if INFLATION is to be controlled and stop-go economic growth avoided. As well as having been a fashionable but controversial theory in academic ECONOMICS (compare KEYNESIAN ECONOMICS), monetarism has also been widely employed in the 1980s by Western governments. It provides a rationale for control of the economy through control of the money supply, including the control of rates of interest, and has also been used as justification for control of state expenditures, and thus the state borrowing which creates credit. The adoption of monetarism was an outcome of the seeming failure of Keynesian economics to prevent high inflation and high unemployment, a loss of international competitiveness and a squeeze on profits. All of these were suggested to be the result of an OVERLOAD ON THE STATE and the escalation of state expenditures.

The issues to which monetarism relates are not only a matter of monetary relations and fiscal policy, or the interests of nation states. Rather, as suggested long ago by MARX, such issues also involve the complex competing interests of multiple groups and classes, internationally as well as within nations. See also HABERMAS, THATCHERISM.

monetarism

1. the theory that inflation is caused by an excess quantity of money in an economy
2. an economic policy based on this theory and on a belief in the efficiency of free market forces, that gives priority to achieving price stability by monetary control, balanced budgets, etc., and maintains that unemployment results from excessive real wage rates and cannot be controlled by Keynesian demand management
www.econlib.org/library/Enc/Monetarism.html
References in periodicals archive ?
Walsh, 2006, "Optimal Monetary Policy with the Cost Channel," Journal of Monetary Economics, 53, 199-216.
I was hooked, and I have been a student of monetary economics and economic history ever since.
A Note on the Theory of Offsetting Capital Flows, Journal of Monetary Economics, 3, 133-138.
Levin (2000), "Optimal Monetary Policy with Staggered Wage and Price Contracts," Journal of Monetary Economics, vol.
Fukui conducted monetary easing very timely, often faster than market expectations,'' said Takayasu Ito, a professor of monetary economics at Niigata University.
Corporate scandals and plummeting share values may have prompted louder calls for regulation and transparency, but financial stability is exceptionally difficult, if not impossible, to achieve, according to speakers at the 20th Symposium on Banking and Monetary Economics.
Author of works including International Monetary Economics, Prof McCallum is a former consultant to the Federal Reserve Board and a visiting scholar at the International Monetary Fund.
For example, the chapters on monetary economics could be put together as could chapters on monetary policy under a different group.
Mundell of Columbia University in New York developed theories about monetary economics in the 1960s that were radical at the time.
The first essay provides some background on the historical evolution of economic theory and policy with regard to international monetary economics during the postwar period.
In the realm of monetary economics, the question of the appropriate definition of money is both crucial and controversial.