ABSTRACT
The quantity theory of money is a term evocative of a general approach rather than a label for a well-defined theory. The quantity theory that retained this role differed sharply from the atrophied and rigid caricature that is so frequently described by the proponents of the new income-expenditure approach — and with some justice, to judge by much of the literature on policy that was spawned by quantity theorists. The quantity theory is in the first instance a theory of the demand for money. To the ultimate wealth-owning units in the economy, money is one kind of asset, one way of holding wealth. The analysis of the demand for money on the part of the ultimate wealth-owning units in the society can be made formally identical with that of the demand for a consumption service. Cagan's examination of hyperinflations is another important piece of evidence on the stability of the demand for money under highly unstable conditions.
