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Implications for economic theory: debunking the Friedmanite myth

In: The Cost of Living Crisis

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Abstract

The Friedmanite myth is that inflation is always and everywhere a monetary problem, which gives rise to the puzzle of why quantitative easing has not produced inflation, and why is it that there is a big gap between monetary growth and inflation. The quantity theory is not universal across space, neither is it universal across time. The myth is debunked on the grounds that central banks cannot control the money supply, that the velocity of circulation is not constant or stable, and that there is no plausible transmission mechanism, as well as other counterfactual assumptions and propositions. Furthermore, the Friedmanites define inflation as such.

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  • ., 2024. "Implications for economic theory: debunking the Friedmanite myth," Chapters, in: The Cost of Living Crisis, chapter 7, pages 123-156, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:23534_7
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    File URL: https://www.elgaronline.com/doi/10.4337/9781035338238.00012
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