Monetarism

"Monetarism today is mainly associated with the work of Milton Friedman, who was among the generation of liberal economists to accept Keynesian economics and then critique it on its own terms." -- Main Wiki entry on Monetarism

Definiton

Basically monetarism views government roles in policy to ensure a stable equilibrium in the Money Market (supply and demand for money). This is known as Price Stability. Too much growth equals higher than normal levels of inflation. Too little growth and the economy may slow. Money is the only way to manage the "health" of the economy, as defined by stability fo economic variables (unemployment, inflation, output growth, etc.)

• Monetarism is considered (by some) to be a sub-division of Keynsian "macroeconomic" demand managment. "Control the money supply and the rest of the economy will take care of itself." - Economist

• This school assumes the economy is classically stable without major underlying changes in the money market.

"Inflation is always and everywhere a monetary phenomenon" (Friedman and Schwartz 1971)

This school is almost defined by the rejection of Money Neutrality

Sources

• Main Wiki entry
• Friedman, Milton. Studies in the Quantity Theory of Money, published in 1956
• Friedman, Milton and Anna J. Schwartz. Monetary History of the United States, 1867-1960. Princeton University Press 1971
• Monetarism from the Economics A-Z of The Economist newspaper.