Analysis of the Economic Ideas of Monetary Neutrality and its role in Modern Monetary Policy

Аннотация

Economic opinions and ideas about the idea of monetary neutrality and its role in market stability are one of the important pillars of economic research, given that these ideas give the real dimensions of everything related to this idea and the importance of applying it at certain times and avoiding applying it at other times. Perhaps economic thinkers have surrounded this idea with everything necessary in order to give economic research in the field of the market an important space to put a set of options available from the monetary authority on the one hand and the government on the other hand. On this basis, the research reached a set of results that can be summarized: the volume of production is determined according to the classical hypothesis by real factors, represented by the number of real means of production available in the economy, whether natural or human, and the volume of production is always at the level of comprehensive use, and any level below that does not exist. They based their hypothesis on Say's law, where the supply of goods and services creates demand for them, meaning that the volume of goods and services is constant at the level of comprehensive use and only in the long run. Keywords: Monetary policy, monetary neutrality, economic theory. who addressed the idea of monetary neutrality. Introduction: The topic of monetary neutrality is one of the theoretical challenges that has faced many CHAPTER ONE criticisms from economic schools. To reach a realistic The Neutrality of Money: Concept and Theories understanding of this concept, the researchers believe he idea of the neutral role of money has a longer history that it is necessary to identify this concept and than the idea of the neutral role of the interest rate; the surround this topic with the most important theoretical neutrality of money is studied by studying the treatments that adopted the idea of monetary monetary equilibrium and its effect on the real neutrality and its importance in controlling the market equilibrium, which requires analyzing the causal through the effective role of monetary policy relationship between money and economic activity by represented by the central bank, in addition to the measuring the effect or lack thereof of changes in the most important duties that the government must quantity of money issued on economic activity; the idea perform to facilitate the process of controlling price of money being neutral means that an increase in the fluctuations in the market. On this basis, the topic was quantity of money must lead to an increase in the covered by reviewing the most important economic general price level, and affect all prices in a regular theories through the opinions of economic thinkers International Journal of Management and Economics Fundamental 18 https://theusajournals.com/index.php/ijmef International Journal of Management and Economics Fundamental (ISSN: 2771-2257) manner and in the same proportion, leaving the Keynes was able to add a new and different relative exchange values unchanged. Then money is contribution to his analysis of the role of money, as he neutral and will have no overall effects on production confirmed that the neutrality of money is through the and employment relative to changes in the quantity of effect of changes in the quantity of money on the money (Galbraith & Darity, 1994, 287). Hayek is interest rate, and then its effect is reflected on the believed to have been the first to refer to the term prices of all assets in relation to their production costs neutrality of money, and this concept first appeared and thus affects the investment rate and the level of during the interwar period, that is, during the thirties of production, as the increase in the quantity of money is the twentieth century (Sayed Hassan, 1985, 194). likely to reduce the interest rate and raise the price of Hayek suggests defining a neutral or negative role for capital assets, which stimulates an increase in the money that would allow it to play a positive or effective production of capital assets and thus increases both role in the economy, meaning that money, from his investment and production in the economy (Keynes, point of view, should not have any effect on economic 1964, 137). James Tobin contributed by developing the activity (Ajina, 1971, 157). and money should not have Keynesian concept in his work entitled "A Dynamic any inflationary or deflationary effect on economic Assemblage Model", where Tobin considered money as activity. Its basic function, according to this concept, is one of the many assets of capital, from which limited to facilitating production and consumption individuals choose to keep it in their wealth portfolio, only, through its use as a means of payment and a and Tobin considered that all of these assets are measure of value expressed in prices, as a measure of alternatives, and then the preference for owning deferred payments, and a means of accumulating money i