Conclusions
Prof. Friedman's OQM suffers from a few defects. M. Friedman did not succeed in the integration of the neoclassical model of general equilibrium and the concept of money. His attempt to introduce money to it by postulating productive and nonpecuniary services could be shown to be inappropriate.
A further investigation of some central points of the working of the model, displayed severe deficiences of the marginal conditions for optimal money balances and of the role of theIRD for the adjustment process.
A statement of the conditions for the profitable use of a general medium of exchange opened the stage for a discussion of methodological positions, which could be used for a defence of OQM. The evaluation of generalizations of the general equilibrium models proposed by K. Arrow and F. H. Hahn (1971) led to the conclusion, that OQM at best is a pathological case of a barter economy, but no pure case of a monetary economy. So the author comes to the conclusion, that the model and its policy implication should be rejected.
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The critical statements concentrate on the “simplest” of M. Friedman's models in M. Friedman (1969a) in short OQM. In M. Friedman's eyes almost all important theoretical problems of monetary theory are treated there and the extensions do not change the central points of the argument of M. Friedman.
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Otruba, H. The optimum quantity of money: A delayed criticism. Zeitschr. f. Nationalökonomie 34, 125–136 (1974). https://doi.org/10.1007/BF01289150
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DOI: https://doi.org/10.1007/BF01289150