Comments on the Paper by Alan Budd, Sean Holly, Andrew Longbottom and David Smith

Abstract

Of the three sections comprising the paper, the first is of no applied economic value. It is concerned with definitions of who is a monetarist and who is not a monetarist. The discussion strikes me as scholastic and sterile. Every one of the issues on which opinion is said to be divided could be settled by empirical evidence. Why should we rely on models that ‘can show that exchange-rate targets are superior to money-supply targets as a method of controlling inflation’? If there is evidence that manipulation of exchange rates by monetary authorities has been successful in controlling inflation, that is the citation the paper should offer. I do not know why ‘views on the relative sizes of the interest elasticity of demand and the income elasticity of demand for money provide an important distinction between monetarism and non-monetarism’. There should not be ‘views’. There should be evidence.