DeLong on Friedman and Keynesianism

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

DeLongs essay is full of misdefined terms.   He defines "laissez-faire"
as government non-intervention, the way commonly misuse by the
uninformed.  The historical notion of laissez-faire as developed by Adam
Smith was an activist government policy to oppose the restriction of
trade. DeLong takes seriously popular but misleading definitions of
Keynesianism and monetarism and "insightfully" discovers that the two
schools have similarities. This is as useful as pointing out the fallacy
of the popular acceptance of surgery being more intrusive than internal
medicine.

DeLong's pronouncement that modern Keynesians are all monetarist now is
on the same intellectual plane as Nixon's declaration of "we are all
Keynesians now".  DeLong is doing it to cover up his tracks in
neo-liberal globalization. He was a minor member of the team of
architects of neoliberal globalization at the White House.  The reason
modern Keynesianism cannot avoid monetarism is because of the collapse
of Bretton Woods in 1971, which has exacerbated the monetary
implications of fiscal policy.  Any government today trying to repeat
Kennedy's 1960 New Economy of tax cuts and fiscal spending will face a
collapse of its currency.  That is, any government except the US because
of dollar hegemony.

Nixon declared "we are all Keynesians now" to cover up the impact of his
abandonment of Bretton Woods gold standard/fixed exchange rate regime on
August 15, 1971, a date that marked the end of US dominance of world
finance.  To compensate for the dethroning of the dollar, Nixon imposed
wage/price control to arrest domestic inflation, which was really an
institutionist measure rather than Keynesian.  Volcker, Nixon's Treasury
Under Secretary for Monetary Policy and International Affairs, at first
reassured foreign central bankers and finance ministers that the US was
merely looking for a "breathing space" to reconstruct the orderly
system.  Later, Volcker admitted that the breakdown of Bretton Woods was
a failure of US leadership and self discipline to rein in US financial
excesses.  For the first time in the post WWII economic order, inflation
becomes exportable. A government willing to dilute the value of its
currency by inflation could gain windfalls at the expense of its trading
partners by currency exchange and pricing advantages.  With unregulated
globalized foreign exchange markets in the 1990s, the US was able to
eventually maintain a strong dollar without merit, through the residual
historical geopolitical arrangement of denominating oil (black gold) in
dollars.   As Robert Skidelsky in his three-volume biography of John
Maynard Keynes documented, even at Bretton Woods, Harry Dexter White
used the dollar (backed by gold) to usurp British financial hegemony and
to use the dollar as the disciplinary device to punish dishonest
currencies. In the 1990s, the dollar is the dishonest currency used by
globalized currency markets to punish other honest currencies.   Milton
Friedman applauded the fall of Bretton Woods, since he and other
conservative monetarists saw floating exchange rates as an excellent
"laissez-faire" free market solution, notwithstanding that facts have
since shown that currency markets,  manipulated by hedge funds the
created recurring financial crises around the globe, are anything but
"free".  Friedman saw the development of foreign exchange markets as
forcing the Federal Reserve to focus on the one thing it allegedly could
control: the domestic money supply.

Volcker, as Fed Chairman,  influenced by Friedman, adopted in 1980 a
"new operating method" for the Fed as a therapeutic thunderbolt on Wall
Street which seemed to have lost faith in the Fed's political will to
control inflation.  The new operating method, by concentrating on
monetary aggregates, and letting it dictate rates swings within a range
from 13 to 19%, to be authorized by the FOMC, was an exercise in
"creative uncertainty" to disrupt the financial markets' complacency
about interest rate stability, which was widely regarded as the key Fed
policy objective.  There had been a traditional expectation that even if
the Fed were to raise rates, it would not permit the market to be
volatile.

The failed experiment in 1980 put the Fed back on its old path: focusing
on interest rates and not money supply, and ironically to vow again to
focus on the long term.  It had no choice but to maintain interest rate
gradualism over money aggregate stability at the price of interest rate
volatility.
Yet, for the long term, money supply was the correct barometer, while
for the short term, interest rate was the appropriate tool.

To make the case that money supply, rather than interest rates, moves
the economy, one would have to assert that the money supply affected the
economy with zero lag, or at least a shorter lag time than interest rate
changes.  Such a claim can only be validated from the long term
perspective.  For the long term, six months may appear as zero, just
like macro economists may consider the bankruptcy of a few hundred
companies creative destruction, until they find out some of their
relatives own some of the bankrupt companies.  Targeting the money
supply produces large sudden swings in interest rates which produce
unintended shifts in the real economy which then feed back into demand
for money. The process has been described as the Fed acting as a
monetarist dog chasing its own tail.

DeLong and his mentors in the Clinton Administration discovered that the
US could fight inflation with cheap imports rather than high interest
rates.  Cheap imports come from two factors, unregulated globalization
to exploit foreign cheap labor and a strong dollar policy made possible
by unregulated foreign exchange markets anchored by the dollar, now a
fiat currency which the Fed can produce at will, as the world sole
reserve currency for trade.  To be fair, the use of the exchange value
of the dollar as a trade policy was thought up by the Reagan
Administration in its effort to control Volcker.  Reagan used the issue
of the dollar's international value, an issue by law falls within the
clear authority of the President, to keep Volcker in line. James Baker
as Treasury Secretary abandoned bogus laissez-faire ideology and adopted
true laissez-faire measures to have the government intervene directly to
lower the value of the dollar to moderate the US trade deficit.  The Fed
was forced to follow Treasury policy as matter of national economic
security.  Rubin, the consummate trader, realized a decade later that
with unregulated global financial markets, the trade deficit can be
offset by a capital account surplus, all driven by an overvalued fiat
currency called the dollar.

The party is about to end after a decade of US trade deficit financing
by crossborder lenders.  Neo-liberal globalization has not done away
with the business cycle after all and Schumpeter was not far wrong that
the choice has been depression now or worse depression later.  Thus
DeLong now tries to defend neoliberalism by pointing out that
Friedmanesque monetarism has been infected with the Keynesian virus. Of
course, DeLong also conveniently neglected to mention that Schumpeter
concluded that creative destruction accelerates the transformation of
capitalism toward socialism.

Friedman's attack on Keynesianism has never been on economics grounds.
Friedman's assertion that in the long run, the fundamental influence
over the private economy is its control of money.  But we all know what
Keynes said about the long run.  Friedman criticized Keynesian
countercyclical fiscal policy as producing only ephemeral results.
Ironically, it is the perpetuation of temporary fiscal spending in
capitalistic democracies that neutralized the validity of Keynesian
economics.  The failure of Keynesianism is traceable to political
distortion rather than faulty economic theory.

This is no mere intellectual argument.  The State Theory of Money
enables every government to provide
sufficient money to fund domestic full employment and economic
development.  The one factor preventing this from happening is the
current foreign exchange regime which even the framers of Bretton Woods
did not support, both in terms of fiat money and unregulated crossborder
flow of funds.  The necessity of global structural unemployment as
mandated by monetarist economics as a means to combat inflation, turns
comparative advantage in trade into an internationalized fallacy Say's
Law, which state that supply creates its own demand - which can only be
true with full employment, yet ironically full employment allegedly
creates inflation that eventually retards supply.


Henry C.K. Liu



> * * * * *
> Prof. Brad DeLong writes:
>
> Last year I published an essay (DeLong, 2000) arguing that modern
> Keynesians are really monetarists. Even if they--we--do not really
> like to admit it, most of the key elements in how modern "new
> Keynesian" economists view the world are derived from or heavily
> influenced by the work of Milton Friedman.
>
> But that essay left me unsatisfied, for it was only half of the story.
> Just as modern Keynesians are (in many respects) monetarists, so
> modern monetarists are really Keynesians--even though they like to
> admit it even less. They are Keynesians in the sense that they have
> the same profound and deep distrust in the laissez-faire market
> economy's ability to deliver macroeconomic stability. Moreover, they
> share the confidence John Maynard Keynes had that limited and
> strategic government interventions and policies could produce
> macroeconomic stability while still leaving enormous space for the
> operation of the market.
>
> Thus there are no believers in true laissez-faire left, at least not
> as far as academic macroeconomics is concerned. The rhetoric of
> post-World War II monetarism held that it was a return to
> laissez-faire in
> macroeconomics. All the government had to do was to get out of the way
> and leave monetary policy in "neutral," and macroeconomic
> stabilization would be successfully achieved. But on closer inspection
> the "neutral" monetary policy advocated in works like Friedman and
> Schwartz (1963) turns out to be a policy that pre-Keynesian
> generations would have called extraordinarily activist on a number of
> levels. The laissez-faire rhetoric obscures the extraordinarily broad
> common ground that Milton Friedman shares with John Maynard Keynes.
>
> This recognition has important implications for understanding the
> meaning and effect of the monetarist counterrevolution of the late
> 1960s and 1970s. The majority view of the monetarist counterrevolution
> was shaped while it was ongoing by Harry Johnson's Ely Lecture, "The
> Keynesian Revolution and the Monetarist Counterrevolution" (Johnson,
> 1971). Johnson saw the monetarist counterrevolution as a true
> intellectual revolution--one that renders the previous literature
> obsolete, irrelevant, and uninteresting as the post-revolutionary
> generation focuses on new issues and dismisses the old questions and
> answers as badly posed or simply incoherent. Johnson also--relatively
> cynically--saw the monetarist counterrevolution as the triumph not of
> new evidence (or a reevalution of old evidence) but as the triumph of
> misleading rhetoric, and was not sure that it reflected an advance in
> knowledge. And Johnson saw the counterrevolution as a genuine
> counterrevolution that would--if successful--return economists'
> thinking to its previous state.
>
> I want to argue that, underneath its laissez-faire rhetoric about a
> non-activist, neutral monetary policy, the monetarism of the
> monetarist counterrevolution had been thoroughly infected by the
> Keynesian virus. It carried with it a way of thinking about
> macroeconomic policy that was as "activist" in its own way as John
> Maynard Keynes could have ever wished.
>
> -----
>
> Pre-Keynesian Business Cycle Theory
>
> The quantity theory of money goes back to David Hume. But the
> transformation of the quantity theory of money into a tool for making
> quantitative analyses and predictions of the price level, inflation,
> and
> interest rates was the creation of Irving Fisher (1911).
>
> However, the quantity theory of money as developed by Fisher (1911)
> and his peers was not a useful tool for business cycle analysis. It
> amounted to an assertion that other things being equal--ceteris
> paribus--the price level would be proportional to the money stock
> coupled with a laundry list of what those other things might be. But
> it did not investigate the relationship of monetary policy and
> monetary shocks to the "ceteris" that were to be "paribus." And it did
> not engage in any significant analysis of the money supply
> determination process at all.
>
> These theoretical shortcomings led other economists to become
> exasperated with monetarist analyses of events made by their
> colleagues in the monetary and financial chaos that was the immediate
> aftermath of World War I. This exasperation led John Maynard Keynes to
> write what is perhaps the most frequently quoted of his many lines,
> the declaration in his Tract on Monetary Reform (1923) that standard
> quantity-theoretic analyses were useless:
>
> "Now 'in the long run' this [way of summarizing the quantity theory:
> that a doubling of the money stock doubles the price level] is
> probably true.... But this long run is a misleading guide to current
> affairs. In
> the long run we are all dead. Economists set themselves too easy, too
> useless a task if in tempestuous seasons they can only tell us that
> when the storm is long past the ocean is flat again..."
>
> Most economists today would agree with Keynes. Milton Friedman
> certainly does. In his 1956 "The Quantity Theory of Money--A
> Restatement," Friedman sets out that one of his principal goals is to
> rescue monetarism from the "atrophied and rigid caricature" of an
> economic theory that it had become in the interwar period. According
> to Friedman, it was the inadequacies of this framework that opened the
> way for the original Keynesian Revolution. The atrophied and rigid
> caricature of the quantity theory painted a "dismal picture." By
> contrast, "Keynes's interpretation of the depression and of the right
> policy to cure it must have come like a flash of light on a dark
> night" (Friedman (1974)).
> Keynes's General Theory may not have had a correct theory of
> business-cycle fluctuations in employment and output, but it least it
> had a theory.
>
> The second strand of pre-Keynesian business cycle theory, was, to
> caricature it only slightly, the over-investment theory claim that
> nothing could be done to avoid, moderate, or shorten depressions. One
> of the most striking declarations of this "liquidationist" point of
> view came from Herbert Hoover's Secretary of the Treasury, Andrew
> Mellon, who saw the Great Depression as a healthy process of
> macroeconomic purgation. In his memoirs Herbert Hoover (1952) wrote
> wrote bitterly of Mellon and the others who had advised inaction
> during the downslide.
>
> This point of view was not one that originated with bankers and
> politicians. It was held by some of the most eminent economists of the
> day. I take Joseph Schumpeter's (1934) expression of it to be
> representative--certainly Schumpeter's is the most rhetorically
> powerful and analytically coherent. Schumpeter begins from the
> observation that the course of economic development is never smooth.
> Investments and enterprises are gambles on the future, made by
> innovative entrepreneurs who see new things to be done or new ways to
> produce old commodities. Sometimes these gambles will fail. The actual
> future that comes to pass is one in which ex post certain investments
> should not have been made,
> or in which ex post certain enterprises should not have been
> undertaken because they are not producing the requisite profits. The
> economy is left with "too much" capital given what the state of
> technology factor supplies, and demand turned out to be, or is perhaps
> left with the "wrong kinds" of capital.
>
> The best that can be done in such a situation is to shut down those
> production processes and enterprises that were based on guesses about
> the way the future would look that did not come to pass. The
> liquidation of investments and businesses releases factors from
> unprofitable uses; they can then be redeployed to other sectors, used
> to produce socially useful current services (in the "too much" capital
> case) or alternative investment goods (in the "wrong kinds" case), and
> used by further waves of entrepreneurs in new gambles on a
> still-uncertain future. But without the initial liquidation, the
> redeployment and the subsequent wave of innovation and entrepreneuship
> cannot take place.
>
> It follows, says Schumpeter, that depressions are this process of
> liquidation and preparation for the redeployment of resources. From
> Schumpeter?s perspective, "depressions are not simply evils, which we
> might attempt to suppress, but?forms of something which has to be
> done, namely, adjustment to?change." This socially productive function
> of depressions creates "the chief difficulty" faced by economic policy
> makers. For "most of what would be effective in remedying a depression
> would be equally effective in preventing this adjustment" (Schumpeter,
> 1934; p. 16). The process of dynamic economic growth requires that
> underutilized factors register their availability on markets. Policies
>
> that stimulate demand in recessions keep factors engaged in activities
> that do not produce value in excess of social cost. Such policies keep
> factor markets from registering the potential availability of
> productive resources for redeployment.
>
> Is it possible to iron out the cycles, leaving an economy growing
> steadily on some equilibrium path rather than irregularly with rapid
> booms and slumps? Schumpeter (1939) thinks not, for business cycles
> are not "?like tonsils, separable things that might be treated by
> themselves." Instead, business cycles are "?like the beat of the
> heart, of the essence of the organism that displays them." In order
> for one
> wave of entrepreneurship to be followed by another, prospective
> entrepreneurs must know where and in what quantities resources
> available for recombination and redeployment are available. Until they
> can learn this, they face "the imposibility of calculating costs and
> receipts in a satisfactory way?[T]he difficulty of planning new things
> and the risk of failure are greatly increased.?[I]t is necessary to
> wait until things settle down?before embarking on [new] innovation."
>
> Schumpeter thus argues that monetary policy does not allow policy
> makers to choose between depression and no depression, but only
> between depression now and a worse depression later.
>
> "Inflation?pushed far enough [would] undoubtedly turn depression into
> the sham prosperity so familiar from European postwar experience,"
> claims Schumpeter (1934), but it "would, in the end, lead to a
> collapse worse than the one it was called in to remedy." Hence his
> "?analysis leads us to believe that recovery is sound only if it does
> come of itself. For any revival which is merely due to artificial
> stimulus
> leaves part of the work of depressions undone and adds, to an
> undigested remnant of maladjustment, new maladjustment of its own
> which has to be liquidated in turn, thus threatening business with
> another [worse] crisis ahead."
>
> Stimulative monetary policies, therefore, "are particulary apt to keep
> up, and add to, maladjustment, and to produce additional trouble for
> the future." Moreover, words like "stimulative" carry a special
> meaning in this context: if private sector actions would lead to a
> fall in, say, the nominal money stock, then a public sector attempt to
> counteract the consequences of such private-sector actions by
> injecting sufficient reserves to hold the nominal money stock constant
> would be "stimulative."
>
> The doctrine that in the long run the Great Depression would turn out
> to have been "good medicine" for the economy, and that proponents of
> stimulative policies were shortsighted enemies of the public welfare
> drew many anguished cries of dissent. British economist Ralph Hawtrey
> scorned those who warned against stimulative policies at the nadir of
> the Great Depression. To call for more liquidation and deflation was,
> Hawtrey said, "to cry, ?Fire! Fire!? in Noah?s flood." Keynes (1931)
> tried to discredit the "liquidationist view" with ridicule. He called
> it an "imbecility" to argue that the "wonderful outburst of productive
> energy" during the boom of 1924?29 had made the Great Depression
> inevitable. He spoke of Schumpeter and his fellow travelers as:
>
> "?austere and puritanical souls [who] regard [the Great Depression]
> ?as an inevitable and a desirable nemesis on? "overexpansion" as they
> call it.?It would, they feel, be a victory for the mammon of
> unrighteousness if so much prosperity was not subsequently balanced by
> universal bankruptcy. We need, they say, what they politely call a
> ?prolonged liquidation? to put us right. The liquidation, they tell
> us, is not yet complete. But in time it will be. And when sufficient
> time has elapsed for the completion of the liquidation, all will be
> well with us again?"
>
> -----
>
> Keynesian Monetarism
>
> It is on this point that we find complete and total agreement between
> John Maynard Keynes and Milton Friedman. The critique of monetary
> policy during the Great Depression found in Friedman and Schwartz
> (1963) is precisely that the Federal Reserve did not do enough to
> stimulate the economy during the Great Depression. It injected
> reserves into the banking system, yes, but it did not inject enough
> reserves to counteract the decline in the money multiplier that took
> place between 1929 and
> 1933 that reduced the money stock and starved the economy of
> liquidity. As Friedman (1974) observed, the Old Chicago Monetarism of
> Jacob Viner, Henry Simons, and Frank Knight had stressed the
> variability of velocity, its potential correlation with the rate of
> inflation, and the instability of the money multiplier. Thus they
> condemned the Hoover administration government for monetary and fiscal
> policies that had "permitt[ed] banks to fail and the quantity of
> deposits to decline" that they saw at the root of America's
> macroeconomic policies in the Great Depression. To cure the depression
> they called for massive stimulative monetary expansion and large
> government deficits.
>
> They (a) did not believe that the velocity of money was stable, and
> (b) did not believe that control of the money supply was
> straightforward and easy. It did not believe that the velocity of
> money was stable because inflation lowered and deflation raised the
> opportunity cost of holding real balances. The phase of the business
> cycle and the concomitant general price level movements powerfully
> affected incentives: economic actors had strong incentives to
> economize on money holdings during times of boom and inflation, and to
> hoard money balances during times of recession and deflation. These
> swings in velocity amplified the effects of monetary shocks on total
> nominal spending.
>
> It did not believe that controlling the money supply was easy because
> fractional-reserve banking in the absence of deposit insurance created
> the instability-generating possibility of bank runs. The fear by banks
> that they might be caught illiquid could cause substantial swings in
> the deposit-reserves ratio. The fear by deposit holders that their
> bank might be caught illiquid could cause substantial swings in the
> deposit-currency ratio. And together these two ratios determined the
> money multiplier. Thus the overall level of the money supply was
> determined as much by these two unstable ratios as by the stock of
> high-powered money itself. And the stock of high-powered money was the
> only thing that the central bank could quickly and reliably control.
>
> The worry that control of the monetary base was insufficient to
> control the money stock was to be dealt with, in Friedman's (1960)
> Program for Monetary Stability, by reforming the banking system to
> eliminate every possibility of fluctuations in the money multiplier.
> Shifts in the deposit-reserve and deposit-currency ratios would be
> eliminated by requiring 100% reserve banking. Shifts in the
> deposit-reserve ratio then become illegal. Banks can never be caught
> illiquid. And in the absence of any possibility that banks will be
> caught illiquid, there is no reason for there to be any shifts in the
> deposit-currency ratio either.
>
> Shifts in the velocity of money in response to cyclical bursts of
> inflation and deflation that amplified fluctuations in the rate of
> growth of the money stock would be eliminated by the
> constant-nominal-money-growth rule. Without cyclical fluctuations in
> the money stock and in inflation, there would be no cause of cyclical
> fluctuations in the velocity of money. Thus banking system reform and
> Federal Reserve reform would eliminate the monetary causes of the
> business cycle, and would make both the money supply and the velocity
> of money stable.
>
> It is important to recognize that in its proper context--that of the
> pre-World War II version of the quantity theory and the pre-World War
> II over-investment theory--this is a very Keynesian vision of
> macroeconomicpolicy.. As Robert Skidelsky puts it in his three-volume
> biography of John Maynard Keynes, Keynes's key contribution was not to
> find a middle way between "laissez-faire and central planning...
> conservatism and socialism" but a genuine Third Way that achieved the
> benefits each
> traditional pole of politics had claimed but had never been able to
> deliver. Keynes saw the market economy as having two great flaws:
> first, that demand for investment was extraordinarily and pointlessly
> volatile as business leaders and investors attempted the hopeless task
> of trying to pierce the veil of time and ignorance, and, second, that
> the fluctuations in the wage level that classical economic theory
> relied on to bring the economy back into balance after such an
> investment fluctuation either did not work at all or worked too slowly
> to be relevant for economic policy. (No, I am not going to be drawn
> into the
> debate about "unemployment disequilibrium.") But if these problems
> could be fixed, Keynes believed, then the standard market-oriented
> toolkit of economists was worthwhile and relevant once more.
>
> And this is exactly Friedman's position. The tools used are a little
> different--rather than Keynes's focus on investment plus government
> spending, Friedman focuses on the banking system and the money stock.
> But in each case the vision is one of powerful and strategic but
> focused and limited government intervention and control of a narrow
> section of the economy, in the hope that the merits of laissez-faire
> can flourish in the rest of the economy.
>
> My conclusion is simple. Much of the history of macroeconomic thought
> is often taught as the rise and fall of alternative schools.
> Monetarists tend to write of the rise and fall of Keynesian
> economics--its rise
> during the Great Depression, and its fall in the 1970s under the
> pressure of stagflation and the theoretical critiques of Friedman,
> Phelps, Lucas, Sargent, and Barro. They tend to see this as the rise
> "interventionism" and then its decline and replacement by a more
> hands-off view that holds that monetary policy should be "neutral."
> Keynesians write of the rise and fall of monetarism--its rise during
> the monetarist counterrevolution, its fall as the instability of
> velocity and the money multiplier became clear, and its replacement by
> the modern "new Keynesian" paradigm.
>
> Neither story appears to me to give an accurate or even a particularly
> useful vision of how it really happened. The fall of monetarism as a
> political doctrine was coupled with the victory of "monetarist" ideas
> and ways of thinking in the mainstream: that was the point of DeLong
> (2000). And what Friedman and Schwartz (1963) would call a "neutral"
> hands-off monetary policy during the Great Depression--one that kept
> the nominal money stock fixed--would have been condemned by pre-World
> War II over-investment theorists as extraordinarily interventionist.
>
> Indeed, it would have been. Between 1929 and 1933 the Federal Reserve
> raised the monetary base by 15% while the nominal money stock shrunk
> by a third. The position of Friedman and Schwartz (1963) is that the
> Federal Reserve should have injected reserves into the banking system
> much, much faster. Sometimes to be "in neutral" requires that you push
> the pedal through the floor.
>
> -----
>
> References
>
> Philip Cagan (1956), "The Monetary Dynamics of Hyperinflation," in
> Milton Friedman, ed. (1956), Studies in the Quantity Theory of Money
> (Chicago: University of Chicago Press).
>
> J. Bradford DeLong (2000), "The Triumph [?] of Monetarism," Journal of
>
> Economic Perspectives.
>
> Irving Fisher (1911), The Purchasing Power of Money (New York:
> Macmillan).
>
> Milton Friedman (1953a), "The Effects of a Full-Employment Policy on
> Economic Stability: A Formal Analysis," in Essays on Positive
> Economics
> (Chicago: University of Chicago Press: 1953), pp. 117-132.
>
> Milton Friedman (1953b), Essays on Positive Economics (Chicago:
> University of Chicago Press).
>
> Milton Friedman (1956), "The Quantity Theory of Money?A Restatement,"
> in
> Studies in the Quantity Theory of Money (Chicago: University of
> Chicago
> Press: 0226264068), pp. 3-21.
>
> Milton Friedman (1968), "The Role of Monetary Policy," American
> Economic
> Review 58:1 (March), pp. 1-17.
>
> Milton Friedman (1960), A Program for Monetary Stability (New York:
> Fordham University Press: 0823203719).
>
> Milton Friedman (1970), "A Theoretical Framework for Monetary
> Analysis,"
> Journal of Political Economy 78:2 (April), pp. 193-238.
>
> Milton Friedman (1971a), "A Monetary Theory of Nominal Income,"
> Journal
> of Political Economy 79:2 (April), pp. 323-37.
>
> Milton Friedman (1974), "Comments on the Critics," in Robert J.
> Gordon,
> ed. (1974), Milton Friedman?s Monetary Framework: A Debate with His
> Critics (Chicago: University of Chicago Press: 0226264076).
>
> Milton Friedman and David Meiselman (1963), "The Relative Stability of
>
> Monetary Velocity and the Investment Multiplier in the United States,
> 1897-1958," in Stabilization Policies (Englewood Cliffs:
> Prentice-Hall).
>
> Milton Friedman and Anna J. Schwartz (1963), A Monetary History of the
>
> United States (Princeton: Princeton University Press).
>
> Charles Goodhart (1970), "The Importance of Money," Quarterly Bulletin
>
> of the Bank of England (June), pp. 159-98.
>
> Robert J. Gordon, ed. (1974), Milton Friedman?s Monetary Framework: A
> Debate with His Critics (Chicago: University of Chicago Press:
> 0226264076).
>
> Seymour Harris (1934), "Higher Prices," in Douglass Brown et al.,
> Economics of the
> Recovery Program (New York: McGraw-Hill, 1934).
>
> Herbert Hoover (1952), Memoirs (New York: Macmillan).
>
> Harry Johnson (1971), "The Keynesian Revolution and the Monetarist
> Counterrevolution," American Economic Review 61 (May), pp. 1-14.
>
> John Maynard Keynes (1923), A Tract on Monetary Reform (London:
> Macmillan).
>
> John Maynard Keynes (1936), The General Theory of Employment,
> Interest,
> and Money (London: Macmillan).
>
> Don Patinkin (1972), "Friedman on the Quantity Theory and Keynesian
> Economics," Journal of Political Economy.
>
> Lionel Robbins (1934), The Great Depression (London: Macmillan).
>
> David Romer (2000), Advanced Macroeconomics 2nd ed. (New York:
> McGraw-Hill).
>
> Joseph Schumpeter (1934), "Depressions," in Douglass Brown et al.,
> Economics of the Recovery Program (New York: McGraw-Hill, 1934).
>
> Joseph Schumpeter (1939), Business Cycles (New York: Macmillan)
>