Abstract
The optimum quantity of money is a normative monetary policy conclusion drawn from the long-run properties of a theoretical model. Most famously associated with Milton Friedman, the optimum calls for a zero nominal rate of interest and thus a steady state of price deflation at the long-run real rate of interest. Although this policy prescription has played a minor role in monetary policy implementation, it has had an enormous influence in monetary theory.
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Acknowledgment
The author would like to thank Charles Carlstrom and John Hoag for their helpful comments.
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Fuerst, T.S. (2018). Optimum Quantity of Money. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1740
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1740
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