Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available athttp://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work.Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=ucpress. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in atrusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact firstname.lastname@example.org.
The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to The Journal of Political Economy.
A Theoretical FrameworkforMonetary Analysis
University Chicago and National Bureau of Economic Research of
Every on empirical study rests a theoretical on framework, a setoftentative hypotheses thatthe evidenceis designedto testor to adumbrate. may It helpthereader theseries monographs money of of on thatAnnaJ.Schwartz and I have been writing set out explicitly generaltheoretical to theframeworkthatunderlies them.1 That framework the quantitytheoryof money-a theorythat has is taken many different of formsand traces back to the very beginning systematic thinking abouteconomicmatters. has probably It been" tested " withquantitative data moreextensively thanany otherset of propositions in formaleconomics-unless it be the negatively slopingdemand curve. Nonetheless, quantity the theory been a continualhas bone of contention. Untilthepastthree decades,it was generally supported seriousstudents by of economics, thosewhomwe would todayterm professional economists, and rejected laymen.However, successoftheKeynesianrevolution by the led to itsrejection perhapsmostprofessional by economists. Onlyrecently has it experienced revivalso thatit once again commands adherence a the
Thisarticle adaptedfrom2 is chapter ofa NationalBureauof EconomicResearch
monograph by Anna J. Schwartz and myself,Monetary Trendsin the U.S. and the
U.K., which nearcompletion. first sections thisarticle is The five of drawheavily on Friedman (1968). I am, as always,heavily indebted Anna Schwartz. have also to I benefited fromdiscussion some partsof this articlein a numberof classes in of monetary theory theUniversity Chicago and a numberof meetings the at of of Workshop Moneyand Banking theUniversity Chicago.H. G. Johnson in of of read thesemifinal draft mademany and useful suggestions revision. for This is a study theNationalBureauof EconomicResearch of whichis undergoing review. completion thisreview, will be republished an NBER Occasional On of it as Paper. (Friedman Schwartz and 1963b) criticizedfor making theoretical us not the framework in to employed thatbook explicit. This articleis largely response thatcriticism. a See Culbertson (1964)and Meltzer (1965).
1 Several reviewers of our A Monetary History of the United States, 1867-1960
JOURNAL OF POLITICAL ECONOMY
economists.Both its acceptanceand its rejection of many professional regularities. about empirical have...