DEVELOPING COUNTRIES AND MONETARISM: EXPLORING THE LIMITATIONS IN THE FACE OF MASS UNEMPLOYMENT"

Abstract

In the realm of inflation analysis over the past century, two prevailing schools of thought, Monetarism and Keynesianism, have often dominated the discourse. Historically, the Quantity Theory of Money held sway from the 19th century until the onset of the Great Depression in the 1930s, at which point economic theory faced a critical juncture.

John Maynard Keynes, in his groundbreaking work of 1936, offered an alternative perspective that resonated in response to the prevailing economic crisis. His contributions emphasized the vital role of government intervention in stimulating and sustaining economic performance, establishing a vital connection between money supply and the real sector.

Despite Keynesianism's rapid proliferation and subsequent dominance by the mid-1950s, its reign proved ephemeral. By 1970, the Quantity Theory of Money reemerged as a potent doctrine under the banner of Monetarism, even in the absence of overt inadequacies in the established Keynesian orthodoxy. Monetarism found particular traction in the United States, gaining widespread acceptance and influencing economic policies, especially among developing nations that embraced IMF recommendations emphasizing a stable money supply as a foundational condition for macroeconomic stability.

This abstract offers a glimpse into the shifting landscape of economic thought regarding inflation and monetary policy over the 20th century, tracing the rise and fall of Keynesianism and the resurgence of Monetarism