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

Abstract

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