THE arguments or variables that enter the demand function for money, and the definition of the quantity of money appropriate for the demand function, have received substantial attention in both the recent and more distant past. For present purposes, it is useful to distinguish three separate disputes about these variables. First, there is the question of the constraint that is imposed on money balances-whether the appropriate constraint is a measure of wealth, income, or some combination of the two. A second dispute has centered on the importance of interest rates and price changes as arguments in the demand function. Third, the question of the definition of money balances has often been raised. Is a more stable demand function obtained if money is defined inclusive or exclusive of time and/or savings deposits, and perhaps other assets that have value fixed in money terms?

Most of us will agree, however, that rapid inflation in any country does serious economic harm by making routine saving highly unprofitable to the saver, by distorting the allocation of investment, by creating a privately profitable but socially wasteful area of activity for middlemen of various species, and in other ways.--Jacob Viner. Continuous galloping inflation is found in some underdeveloped countries; Chile is perhaps the most extreme example. There can be no doubt that it retards growth (through lowering the allocative efficiency of the economy and discouraging savings) even if acute depressive reactions can be avoided.--Gottfried Haberler. The gross national product of Chile may well be a fifth to a fourth below what one would expect from the fine collection of resources at its disposal were it not for its chronic inflation and malallocations in resources that have occurred as a consequence of the direct controls that Chile has employed.--Theodore W. Schultz.