Mainstream economists contend that a policy rule based on the equation of exchange breaks down because

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Mainstream economists argue that the equation of exchange (MV = PQ) cannot reliably guide monetary policy because velocity (V) is more variable and unpredictable than expected. This means that changes in the money supply (M) do not have a proportional effect on nominal GDP (PQ) as suggested by the equation, and that attempts to adjust the money supply to achieve a specific level of nominal GDP could end up doing more harm than good.

Mainstream Economists Contend That a Policy Rule Based on the Equation