The Mystery of the Money Supply Definition

Volume 3, No. 4 (Winter 2000)

According to mainstream economics, the validity of various definitions of money can be ascertained by means of a statistical test. What determines whether money M1, M2, and the other Ms are valid definitions is how well they correlate with national income. Most economists hold that, since the early 1980s, correlations between various definitions of money and national income have broken down. The reason for this breakdown, it is held, is that financial deregulation has made the demand for money unstable.

Austrian Economics and the “Market Test”: A Comment on Laband and Tollison

 

Volume 3, No. 3 (Fall 2000)

 While criticizing the behavior of Austrian economists, Laband and Tollison assert that their purpose is not to “knock” Austrian economics. However, even though they assert that Austrian economics has failed the academic “market test,” they never explain just what it is that makes the Austrian paradigm such a pariah.
Subscribe to