| This is a dissertation on the history of economic ideas in which I explore how economists constructed two specific concepts of optimal monetary policy in the post-World-War-II period in the United States, with a focus mostly on the period of the 1960s and the 1970s. In the second chapter I analyze the concept constructed by the use of a quadratic loss function, which was a tool used before in other disciplines like operations research and management science. My goal in this chapter is to understand how the tool crossed disciplinary boundaries and inaugurated a uniform and objective way of talking about optimal monetary policy. In this sense, the tool stabilized the discourse on optimality (Weintraub (1991)). In the third chapter I discuss an alternative concept of optimality constructed around the idea that inflation is a tax on money holdings and, therefore, that an optimal monetary policy can be defined analogously as an optimal taxation scheme. I then show how monetary economists borrowed not only tools from the public finance literature, but also inducted into their hall of fame one of its giants: the Cambridge mathematician (and economist) Frank P. Ramsey. In the fourth chapter I examine the view held by many economists that Ramsey's contributions to economics were too sophisticated for the late 1920s and could only be fully appreciated roughly forty years later, when economists became more mathematically literate. I discuss how that view was constructed and check its accuracy. Finally, in the conclusion of this dissertation (Chapter 5) I reflect upon how the issues I discuss are part of the broader movements of stabilization of neoclassical economics and the mathematization of the discipline observed in the postwar period (Morgan and Rutherford (1998), Mirowski (2002), and Weintraub (2002)). In doing so, I employ a few ideas from the science studies literature. |
