Abstract
The real bills doctrine and the quantity theory of money represent distinct theoretical models of price-level determination and consequently imply different prescriptions for the conduct of monetary policy. The real bills doctrine takes the price level as exogenous and recommends money supply movements that passively respond to the economy. In sharp contrast, the quantity theory insists that the only way to ensure price level stability is by constraining the money supply and not allowing the money supply to move passively in response to economic conditions.
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Fuerst, T.S. (2018). Real Bills Doctrine Versus the Quantity Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2579
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2579
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