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NBER WORKING PAPER SERIES
DAVID LAIDLER ON MONETARISM
Michael Bordo
Anna J. Schwartz
Working Paper 12593
http://www.nber.org/papers/w12593
NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts
Avenue
Cambridge, MA 02138
October 2006
This paper has been prepared for the Festschrift in Honor of
David Laidler, University of Western
Ontario, August 18-20, 2006. The views expressed herein are
those of the author(s) and do not necessarily
reflect the views of the National Bureau of Economic
Research.
2006 by Michael Bordo and Anna J. Schwartz. A ll rights
reserved. Short sections of text, not to
exceed two paragraphs, may be quoted without explicit permission
provided that full credit, including
notice, is given to the source.
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David Laidler on Monetarism
Michael Bordo and Anna J. Schwartz
NBER Working Paper No. 12593
October 2006
JEL No. E00,E50
ABSTRACT
David Laidler has been a major player in the development of the
monetarist tradition. As the monetarist
approach lost influence on policy makers he kept defending the
importance of many of its principles.
In this paper we survey and assess the impact on monetary
economics of Laidler's work on the demand
for money and the quantity theory of money; the transmission
mechanism on the link between money
and nominal income; the Phillips Curve; the monetary approach to
the balance of payments; and monetary
policy.
Michael Bordo
Faculty of Economics
Cambridge University
Austin Robinson Building
Siegwick Avenue
Cambridge
ENGLAND CD3, 9DD
and NBER
[email protected]
Anna J. Schwartz
NBER365 Fifth Ave, 5th Floor
New York, NY 10016-4309
and NBER
[email protected]
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Meltzer (1963) using wealth instead of permanent income obtained
similar results.3
A large number of studies surveyed in various editions of
LaidlersDemand for Money found powerful evidence
on the long-run stability of money demand. This evidence, as
well as the case made by Friedman and others,
including Laidler for the UK (1976) of the role of monetary
expansion in explaining the great inflation of the late
1960s and 1970s led to the adoption of monetary aggregate
targeting in the US and many countries (to be discussed
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