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Friedman's k-percent rule : ウィキペディア英語版 | Friedman's k-percent rule Friedman's k-percent rule is the monetarist proposal that the money supply should be increased by the central bank by a constant percentage rate every year, irrespective of business cycles. Milton Friedman coauthored a book with Anna Schwartz to summarise a historical analysis of monetary policy, called "Monetary History of the United States 1867-1960". The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch. Friedman proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be calculated by known macroeconomic and financial factors, targeting a specific level or range of inflation. Under this rule, there would be no leeway for the central reserve bank as money supply increases could be determined "by a computer" and business could anticipate all monetary policy decisions.〔(Thomas Palley ), "Milton Friedman: The Great Conservative Partison"〕 ==Definition== According to Friedman, "The stock of money (be ) increased at a fixed rate year-in and year-out without any variation in the rate of increase to meet cyclical needs" (Friedman, 1960). Friedman was of the view that the main policy to be avoided is countercyclical monetary policy, the standard Keynesian policy recommendation at the time. He believed giving governments any flexibility in setting money growth would lead to inflation and therefore, the central bank should follow a procyclical monetary policy and expand the money supply at a constant rate, equivalent to the rate of growth of real GDP.
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