Central Planning and Monetarism: Fellow Travelers?

Abstract

We discuss the monetary institutions and macroeconomics of centrally planned economies (CPEs) ; objectives and techniques of monetary control; the relevance to CPEs of the neutrality property, the natural rate hypothesis, and the quantity theory; the roles of stock .and flow variables and the stability of asset demand and expenditure functions; the relation between monetary policy, fiscal policy and incomes policy in CPEs; the CPE equivalent of a floating exchange rate and its implications for monetary policy; and "super crowding out." Many considerations suggest that monetarism as theory and policy might be more applicable under central planning than it is in market economies.