Lots of people talk about “The” Quantity Theory of Money and “The” Equation-of-Exchange. The terms have a familiar feel to them, they’re part of the furniture of Economics. On careful examination, that appearance changes. There isn’t really one Equation-of-Exchange, there are many. One reason for this is that different economists have different ideas about what counts as a transaction and should be included. The Quantity Theory is similar, most of the arguments against it criticise only one version. This is why arguments about these things often descend into confusion.
Anthony Evans and I investigated these problems. We looked at Ludwig Von Mises’ monetary theory and compared it to others. We found that Mises was aiming at something quite different to Fisher, Friedman or present-day quantity theorists. Our paper on this has now been published in the Review of Austrian Economics.
For those lucky people who work in Universities with journal access:
http://link.springer.com/artic
For us plebs without here’s a slightly earlier version:
http://papers.ssrn.com/sol3/pa
Thanks a lot.
I waited a day after reading the paper to see what others might think here.
The research adds some interesting dimensions to the equations and theories out there in economica, surely a clarification of our money-equation furnishings.
We can see that Mises (and Hayek) took issue with the significance of both the Fisher and Cambridge equation variables, and why so.
They all seem eminently arguable.
But if there was a takeaway that should provide a policy dimension to the current (fiat) monetary-financial crisis, I missed what that was.
But, seriously, thanks for the paper.
There’s no direct policy take-away, I agree with you about that. We didn’t have enough space to talk much about policy. The paper’s more a set of things that need to be kept in mind when thinking about monetary economics.
Thanks.
And certainly, to keep it in mind is what I will do.