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Friedman's Characterization of the Natural Rate of Unemployment

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  • K.Vela Velupillai

Abstract

Arguably, of the many pioneering classics authored by Milton Friedman, it is his Presidential Address to the American Economic Association, in December, 1967, published as The Role of Monetary Policy in the AEA, in March, 1968, that may have had the greatest impact in serious policy circles. In this paper I try to discuss its analytical foundations, largely critically, and find the claims mathematically untenable. The setting – the background – for its emergence, and the way it influenced the future course of macroeconomics is also a part of the narrative, although at a much lesser level of rigour. Friedman’s decisive role in the direction which macroeconomics took, in confused era after the demise of the Neoclassical Synthesis, is outlined, albeit with mixed feelings of intellectual sympathy.

Suggested Citation

  • K.Vela Velupillai, 2014. "Friedman's Characterization of the Natural Rate of Unemployment," ASSRU Discussion Papers 1411, ASSRU - Algorithmic Social Science Research Unit.
    • Handle: RePEc:trn:utwpas:1411
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    File URL: http://www.assru.economia.unitn.it/files/DP_11_2014_I.pdf
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    References listed on IDEAS

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    6. K.Vela Velupillai, 2014. "Constructive and Computable Hahn-Banach Theorems for the (Second) Fundamental Theorem of Welfare Economics," ASSRU Discussion Papers 1403, ASSRU - Algorithmic Social Science Research Unit.
    7. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
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    Cited by:

    1. Katherine Moos, 2016. "The Transvaluation of the Theory of Economic Policy: The Lucas Critique Reconsidered," Working Papers 1603, New School for Social Research, Department of Economics.

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