Year: 2014
Author: Soldatos, Gerasimos T., Varelas, Erotokritos
Credit and Capital Markets – Kredit und Kapital, Vol. 47 (2014), Iss. 4 : pp. 677–687
Abstract
Post-war Chicago School advanced a blend of pre-war Chicago and non-Chicago quantity theory, termed Monetarism. The preponderance of the non-Chicago element in this blend has been documented well by the relevant literature. This note maintains that monetarism"s only contribution to pre-war Chicago is the k-percent rule as a powerful countercyclical policy instrument, indeed, along with the cyclically-balanced-budget and no-open-market-operations rules put forth by pre-war Chicago. Early Chicago"s thinking was motivated by what nowadays is called Quantity Theory of Credit too, and a full-reserve banking rule was also included as a policy instrument. This rule was advanced from the viewpoint of no-bank-money-rule. By identifying bank money with commercial bank seigniorage, this rule is found here to be consistent with any value of the reserve ratio that nullifies such a seigniorage depending on the bank profit margin. This rule is also as price stabilizing as the k-percent rule, and this is the reason the contribution of the latter to Chicagoan policymaking is linked to its countercyclical rather than anti-inflationary power.
Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/ccm.47.4.677
Credit and Capital Markets – Kredit und Kapital, Vol. 47 (2014), Iss. 4 : pp. 677–687
Published online: 2014-12
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 11
Keywords: B26 E52 E83 Chicago School Full-reserve banking No-bank-money locus-rule Friedman"s rule counter cyclically balanced budget
Author Details
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| Section Title | Page | Action | Price |
|---|---|---|---|
| Gerasimos T. Soldatos / Erotokritos Varelas: A Letter on Full-Reserve Banking and Friedman’s Rule in Chicago Tradition | 1 |