Monetarism

Monetarism is a macroeconomic theory that treats control of the money supply as a primary means of managing inflation and economic stability. It emphasizes the long-run relationship between money growth and the price level.

Quantity theory of money: A theory relating the money supply, its circulation rate, prices, and economic output. It provides the accounting relationship behind monetarist claims about money growth and inflation.
Milton Friedman: An American economist who advanced monetarism and received the 1976 Nobel Memorial Prize in Economic Sciences. His research and public advocacy made monetarism its best-known modern formulation.
Keynesian economics: A macroeconomic tradition emphasizing aggregate demand and the role of fiscal and monetary policy in stabilizing output. Its early postwar versions gave fiscal policy a larger stabilization role than monetarists accepted.
Great Depression: A worldwide economic collapse beginning in 1929, marked by severe declines in output, employment, and prices. Friedman and Schwartz argued that Federal Reserve failures turned a downturn into a monetary catastrophe.
Velocity of money: The rate at which money circulates through an economy to support transactions. Its stability determines how closely money growth tracks nominal spending in monetarist analysis.
Anna Schwartz: An American economic historian whose research examined monetary policy and financial history. Her collaboration with Friedman shaped the monetarist account of the Great Depression.
New Keynesian economics: A modern macroeconomic framework explaining short-run fluctuations through price and wage rigidities. It shares attention to monetary policy but emphasizes nominal rigidities rather than money-supply targets.
Volcker disinflation: The sharp reduction in United States inflation under Federal Reserve chair Paul Volcker from 1979 onward. The Federal Reserve's shift toward monetary aggregates reflected monetarist influence during this campaign.
Money supply: The stock of monetary assets available in an economy at a given time. Monetarist policy targets its growth, though the relevant monetary aggregate can be difficult to control.
Clark Warburton: An American economist who argued for monetary explanations of business fluctuations before monetarism became prominent. His earlier empirical work anticipated several questions later central to monetarist research.

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