In Old Chicago: Simons, Friedman, and the Development of Monetary-Policy Rules

This paper examines the different policy rules proposed by Henry Simons, who, beginning in the mid-1930s, advocated a price-level stabilization rule, and by Milton Friedman, who, beginning in the late-1950s, advocated a rule that targeted a constant growth rate of the money supply. Although both rul...

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Bibliographic Details
Published in:	Journal of money, credit and banking credit and banking, 2015-02, Vol.47 (1), p.99-121
Main Author:	TAVLAS, GEORGE S.
Format:	Article
Language:	eng
Subjects:	B22 E52 Economists Federal Reserve monetary policy Friedman, Milton Growth rate Henry Simons Illinois Milton Friedman Monetary policy monetary-policy rules Money supply Price stability Price stabilization Secularism Simons, Henry Stabilization policy Studies U.S.A Uncertainty
Online Access:	Get full text
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Summary:	This paper examines the different policy rules proposed by Henry Simons, who, beginning in the mid-1930s, advocated a price-level stabilization rule, and by Milton Friedman, who, beginning in the late-1950s, advocated a rule that targeted a constant growth rate of the money supply. Although both rules shared the objective of eliminating the policy uncertainty emanating from discretion, they differed because of the different views of Simons and Friedman about the stability of secular relationships. Simons' rule relates to modern rules that emphasize the pursuit of price stability as representing optimal monetary policy.
ISSN:	0022-2879 1538-4616