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We are going to examine the bases of monetarism. We investigate the philosophical bases of equilibrium in money and commodity markets and try to reinterpret "quantity theory of money" to express domestic monetary equilibrium. We deal with important monetary variables as velocity of circulation of money, rate of interest, supply and demand for money with emphasis on different demand motives. External monetary equilibrium with foreign money and exchange rate and price level determination in an open economy are discussed. The subject is generalized to international monetary equilibrium. Important monetary rules that determine exchange rate at international level are introduced. Relation of interest rate and exchange rate is also discussed and determined. Moreover, we reinterpret and develop the original Fisher's quantity theory of money by introducing quantitative relation between transaction and income. Empirical investigations all confirm our formulation. Finally, we define money logically and philosophically and the relation among transaction, output, intermediate input, aggregate supply and demand and their relations to money are explained.
About the author
Professor Bijan Bidabad is a multidisciplinary experienced scientist. He received B.A. in Political Science, M.S. and Ph.D. in Economics from Iran and Switzerland and has written more than 400 papers and books. Largest Macroeconometric Model of Iran, Rastin Banking and proposition of different international law declarations are of his recent works.
