Hayek Rule: A New Monetary Framework

“We propose a new policy framework for monetary policy, one that looks at monetary aggregates and factors in the connections between monetary policy and asset prices. Our proposed “Hayek rule” is a symmetrical approach that seeks to stabilize nominal income, in both good and bad times, through a system in which the annual flow of money—what we will refer to as the “circulating medium of exchange,” which is equal to nominal spending (MV)—remains at a constant level”. – Marius Gustavson and Anthony Randazzo

What an interesting proposal.

http://reason.org/files/federal_reserve_monetary_policy_hayek_rule.pdf


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About Christopher Hessenflow

Christopher Hessenflow is a financial planner in the Chicago area. He works with all sorts of people who are much more interesting than he is. He enjoys his career which lends him time to think and, sometimes, be creative. Chip was born bald.
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