Friedman (1968) proposes a constant money growth rate rule to establish the stability of the market economy. We examine whether his suggestion is reasonable or not. We seek to develop the Vanderkamp (1975) model, which captures the essential points of monetarism: the quantity theory of money and the natural rate of unemployment. Our main finding is that the economy experiences chaotic fluctuations around the steady state when the adjustment speed of inflationary expectations is sufficiently slow.
| Published in |
International Journal of Economic Behavior and Organization (Volume 3, Issue 2-1)
This article belongs to the Special Issue Recent Developments of Economic Theory and Its Applications |
| DOI | 10.11648/j.ijebo.s.2015030201.21 |
| Page(s) | 73-76 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2015. Published by Science Publishing Group |
Monetarist, Constant Money Growth Rate Rule, Chaotic Fluctuations
| [1] | Devaney, R. L. (2003) An Introduction to Chaotic Dynamical Systems. Colorado: Westview Press. |
| [2] | Friedman, M. (1968) The role of monetary policy. American Economic Review, 58, 1-17. |
| [3] | Friedman, M. and Schwartz, A. J. (1963) A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press. |
| [4] | Guckenheimer, J. and Holmes, P. (2002) Nonlinear Oscillations, Dynamical Systems, and Bifurcations of Vector Fields. Corrected 6th Printing. Berlin: Springer.-Verlag. |
| [5] | Phelps, E. S. (1968) Money-wage dynamics and labor-market equilibrium. Journal of Political Economy, 76, 678-711. |
| [6] | Phillips, A. W. (1958) The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1957. Economica, 25, 283-299. |
| [7] | Soliman, A. S. (1996a) Fractals in nonlinear economic dynamic systems. Chaos, Solitons & Fractals, 7, 247-256. |
| [8] | Soliman, A. S. (1996b) Transitions from stable equilibrium points to periodic cycles to chaos in a Phillips curve system. Journal of Macroeconomics, 18, 139-153. |
| [9] | Lines, M. and Westerhoff, F. (2010) Inflation expectations and macroeconomic dynamics: The case of rational versus extrapolative expectations. Journal of Economic Dynamics and Control, 34, 246-257. |
| [10] | Vanderkamp, J. (1975) Inflation: A simple Friedman theory with a Phillips twist. Journal of Monetary Economics, 1, 117-122. |
APA Style
Hiroyuki Yoshida. (2015). A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations. International Journal of Economic Behavior and Organization, 3(2-1), 73-76. https://doi.org/10.11648/j.ijebo.s.2015030201.21
ACS Style
Hiroyuki Yoshida. A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations. Int. J. Econ. Behav. Organ. 2015, 3(2-1), 73-76. doi: 10.11648/j.ijebo.s.2015030201.21
AMA Style
Hiroyuki Yoshida. A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations. Int J Econ Behav Organ. 2015;3(2-1):73-76. doi: 10.11648/j.ijebo.s.2015030201.21
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Download@article{10.11648/j.ijebo.s.2015030201.21,
author = {Hiroyuki Yoshida},
title = {A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations},
journal = {International Journal of Economic Behavior and Organization},
volume = {3},
number = {2-1},
pages = {73-76},
doi = {10.11648/j.ijebo.s.2015030201.21},
url = {https://doi.org/10.11648/j.ijebo.s.2015030201.21},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijebo.s.2015030201.21},
abstract = {Friedman (1968) proposes a constant money growth rate rule to establish the stability of the market economy. We examine whether his suggestion is reasonable or not. We seek to develop the Vanderkamp (1975) model, which captures the essential points of monetarism: the quantity theory of money and the natural rate of unemployment. Our main finding is that the economy experiences chaotic fluctuations around the steady state when the adjustment speed of inflationary expectations is sufficiently slow.},
year = {2015}
}
TY - JOUR T1 - A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations AU - Hiroyuki Yoshida Y1 - 2015/04/17 PY - 2015 N1 - https://doi.org/10.11648/j.ijebo.s.2015030201.21 DO - 10.11648/j.ijebo.s.2015030201.21 T2 - International Journal of Economic Behavior and Organization JF - International Journal of Economic Behavior and Organization JO - International Journal of Economic Behavior and Organization SP - 73 EP - 76 PB - Science Publishing Group SN - 2328-7616 UR - https://doi.org/10.11648/j.ijebo.s.2015030201.21 AB - Friedman (1968) proposes a constant money growth rate rule to establish the stability of the market economy. We examine whether his suggestion is reasonable or not. We seek to develop the Vanderkamp (1975) model, which captures the essential points of monetarism: the quantity theory of money and the natural rate of unemployment. Our main finding is that the economy experiences chaotic fluctuations around the steady state when the adjustment speed of inflationary expectations is sufficiently slow. VL - 3 IS - 2-1 ER -
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