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The Triumph of Keynes: What Now for Monetary Policy Research?

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  • Paul Dalziel

Abstract

This paper argues that De Long’s (2000) announcement of “the triumph of monetarism” is misplaced on the grounds that the cornerstone of monetarism–the quantity theory of money–is no longer used by central banks in practice. Instead, modern monetary policy is based on maintaining aggregate demand growth that is compatible with supply-side capacity growth, a framework that can be traced to chapter 21 of Keynes’s (1936) General Theory. This paper discusses the implications for future monetary policy research, paying particular attention to how the “output gap” should be interpreted in explaining inflationary trends.

Suggested Citation

  • Paul Dalziel, 2002. "The Triumph of Keynes: What Now for Monetary Policy Research?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(4), pages 511-527, July.
    • Handle: RePEc:mes:postke:v:24:y:2002:i:4:p:511-527
    DOI: 10.1080/01603477.2002.11490341
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    References listed on IDEAS

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    1. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
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    Cited by:

    1. Marc Lavoie, 2006. "A Post‐Keynesian Amendment To The New Consensus On Monetary Policy," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 165-192, May.
    2. Edwin Le Héron, 2004. "From the Canadian Experiment of the 1990's: A New Consensus on Monetary Policy," Post-Print halshs-00159897, HAL.
    3. Giuseppe Fontana & Alfonso Palacio‐Vera, 2007. "Are Long‐Run Price Stability And Short‐Run Output Stabilization All That Monetary Policy Can Aim For?," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 269-298, May.
    4. Peter Docherty, 2012. "Keynes’s General Theory, the Quantity Theory of Money and Monetary Policy," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 6, Edward Elgar Publishing.
    5. Boermans, Martijn Adriaan & Moore, Basil J, 2008. "Locked-in and Sticky Textbooks: Mainstream Teaching of the Money Supply Process," MPRA Paper 14845, University Library of Munich, Germany, revised Apr 2009.

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