The role of monetary policy
There are 7 fallacies associated with Friedman’s (1968) article “The Role of Monetary Policy”:
(1) “The Role of Monetary Policy” was Friedman’s first public statement of the natural rate hypothesis. (2) The Friedman-Phelps Phillips curve was already presented in Samuelson and Solow’s (1960) analysis. (3) Friedman’s specification of the Phillips curve was based on perfect competition and no nominal rigidities. (4) Friedman’s (1968) account of monetary policy in the Great Depression contradicted the Monetary History’s version. (5) Friedman (1968) stated that a monetary expansion will keep the unemployment rate and the real interest rate below their natural rates for two decades. (6) The zero lower bound on nominal interest rates invalidates the natural rate hypothesis. (7) Friedman’s (1968) treatment of an interest-rate peg was refuted by the rational expectations revolution.
Seven Fallacies Concerning Milton Friedman’s ‘The Role of Monetary Policy’
Authors: Edward Nelson
From: Federal Reserve Board
Farmer praises Friedman and buries some of his ideas
The General Theory of Employment Interest and Money was not a wrinkle on the Quantity Theory of Money. It was a triumph of rational thought which altered economics, politics and popular thinking forever. To answer the question that Franco Modigliani posed to the attendees of a 1977 conference at the Federal Reserve Bank of San Francisco: Should we Forsake Stabilization Policy? My answer is: Not if we wish to maintain “maximum sustainable employment”. But the reason is not that wages and prices are slow to adjust: it is that market economies can often get stuck in an equilibrium that is not socially optimal.
The Role of Financial Policy
Author: Roger E. A. Farmer
From: University of Warwick
Friedman on Ending Government Programs
In 1962 Friedman outlined 14 government activities that governments of free societies should not undertake. Where are we now?
Friedman on Ending Government Programs
By: David Henderson
