Arnold Kling  

Debating Monetarism

PRINT
David Gratzer's Misleading Art... A Buck is a Buck...

Matt Rognlie takes on the monetarists. Note that the comments on the post, including Matt's comments, are where the debate gets elucidated.


Comments and Sharing





COMMENTS (1 to date)
Lee Kelly writes:

I wish people knew what a tautology is. In a sense, "MV = PY" is a tautology. But statements about "MV = PY" are not necessarily tautologies, and since it is primarily these statements that concern us, that "MV = PY" is wholly irrelevant. "F = ma" is also a tautology y'know.

Karl Popper popularised the idea that tautologies were scientific no-nos. Unfortunately, few people seem to understand the context of that prohibition.

"MV = PY" is an abstract object with tenuous connections to reality. By itself, the equation of exchange entails nothing about reality. It is not an empirical claim. Its truth or falsity are determined only by the rules of the formal language in which it is expressed.

If money, prices, and production were observed to behave contrary to their corresponding variables in the equation of exchange, then the equation of exchange would not be shown false. It is a tautology. It cannot be false. However, statements about the equation of the exchange may be false, such as that it describes the actually existing phenomena that we observe, may be false, because they are not necessarily tautologies.

Okay, I'll read the rest of the post now.

Comments for this entry have been closed
Return to top