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5 - On the Shoulders of Giants

Monetary Policy Insights of the Classically Liberal Nobel Laureates

Published online by Cambridge University Press:  13 May 2021

Peter J. Boettke ,
Alexander William Salter  and
Daniel J. Smith
Peter J. Boettke
Affiliation:
George Mason University, Virginia
Alexander William Salter
Affiliation:
Texas Tech University
Daniel J. Smith
Affiliation:
Middle Tennessee State University
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Summary

At root, the problems with the Federal Reserve (and many other central banks) are institutional. The repeated recessions and crises in the era of the Fed show that we need a radical reimagination of the basic institutions of monetary policy. In this chapter, we survey the work of the three great classically liberal Nobel laureates of the twentieth century – James Buchanan, F. A. Hayek, and Milton Friedman – to show that each of them gave serious consideration to monetary-institutional fundamentals. Our focus is not on their particular conclusions, but on how they thought about the problems of monetary institutional design. This represents a very different style of scholarship than macroeconomists and monetary economists currently practice. Unless scholars engage the research projects of Buchanan, Hayek, and Friedman, research in monetary economics will not be of much help in achieving lasting macroeconomic stability.

Keywords

Classical LiberalismF. A. HayekJames BuchananMilton FriedmanMonetary InstitutionsMonetary Rules
Type
Chapter
Information
Money and the Rule of Law
Generality and Predictability in Monetary Institutions
 , pp. 125 - 145
Publisher: Cambridge University Press
Print publication year: 2021

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