The Quantity Theory Favorably Reconsidered: II Public Deposited

Creator Series Issue number
  • 221
Date Created
  • 1982-10
Abstract
  • This paper considers a view commonly associated with the "quantity theory of money": that banks should face 100 percent reserve requirements. It argues first that the objectives of the quantity theorists' proposals were more than merely price level stability, and that in fact, price level stability was at most a secondary objective of their proposals. Second, it argues that these theorists had a world with distortions in mind with respect to their proposals. These are present in a special setting examined that (a) supports the imposition of 100 percent reserve requirements (on the basis of an unconstrained Pareto criterion), and (b) supports the view that these restrictions stabilize the price level and make its movements more "predictable."

Subject (JEL) Mot-clé Alternative title
  • The reals bills doctrine versus the quantity theory : a reconsideration / Thomas Sargent, Neil Wallace.
  • The quantity theory favorably reconsidered / Bruce Smith.
Date Modified
  • 07/11/2019
Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
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