Re: [Pen-l] query: Milton Friedman

["Jim Devine" <jdevine03@xxxxxxxxx>]

Michael Perelman wrote:
> I don't recall the quotation but Patinkin's critique of Friedman
>  included the charge that his reformulation was highly Keynesian in
>  origin.

MF's macroeconomics was very Hicks-Keynesian (IS/LM) or what's now
called "new Keynesian." It was basically the Walrasian utopia with
sticky wages (and thus prices) in the short run, but totally flexible
wages & prices in the long run. Giving him "monetarism" and
distinguishing him from new Keynesianism were his views that (1) the
Fed controls the money supply pretty exactly and (2) the relationship
between the money supply and nominal GDP is stable and predictable (so
it's the Fed's fault when inflation or deflation hits). It's these
that new Keynesians and most other macroeconomists have rejected.

Of course, a lot of his macroeconomic theory was inchoate since his
main approach involved a combination of relatively crude empiricism
(his book with Anna J. Schwartz) and free-market fundamentalism
(_Capitalism and Freedom_).
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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