On the Complementarity of the Austrian and Monetarist Traditions

In his article, Professor Salin focuses on two main aspects of monetary economics: first, the neutrality and stability of money, and, second, the balance of payments. Professor Salin rightly points out that monetarists in some sense follow a more pragmatic approach by trying to formulate an optimal monetary policy rule, given the current monetary system. At least some Chicago school economists are indeed open to a genuine free market in money. But there is an important element that makes economists of the Chicago-monetarist tradition more prone to opting for government involvement in the monetary system than Austrian economists. This element lies in the schools’ opposing views on methodology. The Chicago economists stand for an instrumentalist position, whereas Austrian economists stand for a realist position.