S. C. Tsiang on the Money Supply, 10th Dec., 2010.

In 1973, S. C. Tsiang published an article titled "The Monetary Theoretic Foundation of the Modern Monetary Approach to the Balance of Payments."  In it, he defended the assumption that the total size of the money supply is important.

In the heyday of the Keynesian Revolution, however, [Hume's price-specie-flow mechanism] had come to be regarded as inoperative, as the quantity of money itself was regarded by the prevailing monetary theory as a matter of no consequence. [ . . . ] The subsequent Keynesian extension of it merely superimposes a multiplier analysis upon the primary change in trade balance under the usual Keynesian assumptions of an infinitely elastic demand for or supply of money in addition to the assumption of constant wages and prices of domestic goods. Any possible effects of the money supply are effectively eliminated by these implicit assumptions.

During the post-war years of continuous inflationary pressure and high levels of employment in most countries, it became increasingly hard for any intelligent economist to continue to believe in the infinite interest elasticity of the demand or supply of money.

He also explains his research on monetary policy in Denmark, Peru, and France to explain how it has affected said counties' trade volume and currency pegs.