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The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's "Who Was Milton Friedman?"

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  • Edward Nelson
  • Anna J. Schwartz

Abstract

Paul Krugman's essay "Who Was Milton Friedman?" seriously mischaracterizes Friedman's economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman's impact on modern monetary economics and on today's central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.

Suggested Citation

  • Edward Nelson & Anna J. Schwartz, 2007. "The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's "Who Was Milton Friedman?"," NBER Working Papers 13546, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13546
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nelson, Edward, 2017. "Reaffirming the Influence of Milton Friedman on U.K. Economic Policy," Working Papers 2017-01, University of Sydney, School of Economics, revised Feb 2017.
    2. William Poole & Robert H. Rasche & David C. Wheelock, 2012. "The Great Inflation: Did The Shadow Know Better?," NBER Chapters,in: The Great Inflation: The Rebirth of Modern Central Banking, pages 61-107 National Bureau of Economic Research, Inc.
    3. Boyer, Russell S., 2009. "Reflections on Milton Friedman's contributions to open economy money/macro," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1097-1116, November.
    4. Lothian, James R., 2009. "Milton Friedman's monetary economics and the quantity-theory tradition," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1086-1096, November.
    5. Edward Nelson, 2008. "Why Money Growth Determines Inflation in the Long Run: Answering the Woodford Critique," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1791-1814, December.
    6. Edward Nelson, 2008. "Friedman and Taylor on monetary policy rules: a comparison," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 95-116.
    7. Edward Nelson, 2018. "Seven Fallacies Concerning Milton Friedman's "The Role of Monetary Policy"," Finance and Economics Discussion Series 2018-013, Board of Governors of the Federal Reserve System (U.S.).
    8. David Laidler, 2013. "Reassessing the Thesis of the Monetary History," University of Western Ontario, Economic Policy Research Institute Working Papers 20135, University of Western Ontario, Economic Policy Research Institute.
    9. Peter J. Boettke & Daniel J. Smith, 2016. "Evolving views on monetary policy in the thought of Hayek, Friedman, and Buchanan," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(4), pages 351-370, December.
    10. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    11. repec:aea:jecper:v:32:y:2018:i:1:p:195-210 is not listed on IDEAS

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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