Some reflections on the current state of the monetarist debate

Conclusion This paper has surveyed the status of five monetarist propositions. On one of them, the role of money in income changes, there has been a substantial coming together of Keynesians and monetarists, though the gap between them is still major. On the second, the transmission process, the standard Keynesian criticism of monetarism as a black box does not seem compelling, though this, of course, does not necessarily imply that the monetarist transmission process is superior to the Keynesian one. Concerning the third issue, the stability of the private sector, neither side is able to make a halfway convincing case; we just do not know the answer. The fourth issue, the use of a money stock target versus an interest rate target, is also an issue about which we know little, though the case for using a money stock target does seem the stronger. Finally, there is the dispute about a monetary growth rate rule. Here, too, the available evidence is far from convincing.Earlier versions of this paper were presented at seminars at the University of Freiburg and the Technical University of Vienna. The author is indebted for helpful comments to Thomas Cargill, Helmut Frisch, Steven Sheffrin and Ronald Teigen who, of course, are not responsible for any remaining errors.