Economic policy and economic theory 30s - 70s of the 20th century characterized by the fact that the leading role it played in the economic views keysianstva.But in the 70s there was a peculiar twist to the neoclassical theory.He was associated primarily with the development of discrediting keysianstva due to increased unemployment and a steady rise in prices.
New Classical quantity theory of money is represented in the form of monetarism.The origin of the quantity theory dates back to the 16th century, when there was the establishment of the first in the history of the New Economic School.It was called the School of the mercantilists.In this case, the quantitative theory was a reaction to the major tenets of mercantilism, but primarily on the characteristic of their doctrine that the more money there is, the faster the sale, respectively, increases the velocity of circulation, which has a beneficial effect on the production.
doubt in this thesis about the positive impact of growth of quantity of precious metals in the country famous English philosopher John Locke and David Hume.They first compared the amount of precious metals and the current level of prices.As a result, it became clear that prices for goods mirror the weight of the precious metal in circulation of the country.
Thanks to them originated quantity theory of money.Philosophers were able to determine that inflation falls at a time when the quantity of the goods can not be compared with the amount of money.These ideas were favorably received by the main representatives of development at the time of the classic direction in economic policy.Especially positive was looking at the proposed theory of Adam Smith, who has always regarded the money only as a means of circulation, a kind of technical weapons, facilitates the exchange, so he did not recognize their intrinsic value.
most rigid quantity theory of money came through the American economist Irving Fisher, who in his famous work "The purchasing power of money" was able to formulate a well-known equation, resting on a double amount of the final terms of trade transactions:
- as the product of mass andthe velocity of circulation of means of payment;
- as a work yen level and quantity of goods sold.
view this Fisher formula: MV = PQ.The right side of the equation is a commodity, and shows the volume of goods sold, pricing assessment which allows you to set on the demand for money.The left side is the money, and displays the amount that was spent on the purchase of goods.It fully reflects the money supply.
As a result, the Fisher equation is a characteristic of the relationship between money and commodity markets.Since the money - it's just an intermediary acts in the purchase and sale, the amount of money spent will always be identical to the number of prices of goods and services sold.In essence, this equation is an identity, reflecting the proportionality between the price level and the amount of money.
Fisher's quantity theory of money is very common in American literature.European economists took as the most popular version of this theory in Cambridge version, or, more simply, the theory of cash balances designed Pigou and Alfred Marshall.They sought to make the main emphasis on the patterns of use of money as income.The theory of reasoned idea of cash balances, which should be understood by part of the proceeds stored individual liquidity, cash.
monetarist theory of money, as well as other variants of the quantitative theory, based on the following assumptions:
- money currently in circulation, strictly defined autonomously;
- velocity of this amount is very rigidly fixed;
- ability to influence the entire monetary sphere in the production process is excluded.
quantity theory of money was included in the policy framework, which is conducted by the central banks of western Europe in the 20s of the 20th century.This policy did not live up to expectations, so it was decided to go to the neoclassical economic theory.
