Edward Prescott on money and the business cycle
07 Aug 2019 Leave a comment
in business cycles, econometerics, Edward Prescott, macroeconomics, Milton Friedman, monetarism, monetary economics Tags: monetary policy, real business cycles
Alan Walters predicted this in the 1960s
06 Jul 2019 Leave a comment
in economic history, macroeconomics, monetarism, monetary economics
THE SUCCESS OF THE FED AND THE DEATH OF MONETARISM. By: KISHOR, N. KUNDAN, KOCHIN, LEVIS A., Economic Inquiry, Jan2007, Vol. 45, Issue 1
Why do Keynesian macroeconomists still bother?
29 Jun 2019 Leave a comment
in business cycles, fiscal policy, macroeconomics, monetarism, monetary economics
Chari, V. V., Patrick J. Kehoe, and Ellen R. McGrattan. 2009. “New Keynesian Models: Not Yet Useful for Policy Analysis.” American Economic Journal: Macroeconomics, 1 (1): 242-66.
Sargent on history as written by the late switchers, saying I thought of that too; said so in a footnote, in a seminar or as an aside. But Sargent was at Berkeley, knowing who is against everything he, Lucas and others said
23 Jun 2019 Leave a comment
in business cycles, fiscal policy, history of economic thought, macroeconomics, monetarism, monetary economics
From http://www.tomsargent.com/research/romers3.pdf Reactions to the Berkeley story Thomas J. Sargent October 21, 2002
Which dead macroeconomist is to blame to monetary policy prior to the GFC?
19 Sep 2018 Leave a comment
in budget deficits, business cycles, fiscal policy, global financial crisis (GFC), great recession, macroeconomics, monetarism, monetary economics Tags: Keynesian macroeconomics
New Keynesian macroeconomics isn’t a progressive research programme
06 Aug 2018 Leave a comment
in budget deficits, business cycles, economic growth, fiscal policy, great depression, history of economic thought, macroeconomics, monetarism, monetary economics, Robert E. Lucas Tags: New Keynesian macroeconomics
My favorite Greg Mankiw quote on the influence of modern macroeconomics
26 Jul 2018 Leave a comment
in budget deficits, business cycles, economic growth, fiscal policy, global financial crisis (GFC), great depression, great recession, macroeconomics, monetarism, monetary economics Tags: Greg Mankiw
Stagflation was not caused by Cost-Push factors – Milton Friedman
15 May 2018 1 Comment
in business cycles, macroeconomics, Milton Friedman, monetarism, monetary economics Tags: cost-push
The new reserve bank governor was talking about how rising wages may increase inflation. The horror, the horror!
Monetary Policy: The Best Case Scenario
11 Aug 2017 Leave a comment
in business cycles, economics, inflation targeting, macroeconomics, monetarism, monetary economics Tags: monetary policy
Understanding the Great Depression
24 May 2017 1 Comment
in business cycles, economic history, great depression, macroeconomics, monetarism, monetary economics
Milton Friedman – Congressional House Economic Task Force (1993)
15 Oct 2016 Leave a comment
in economic history, fiscal policy, great depression, history of economic thought, macroeconomics, Milton Friedman, monetarism, monetary economics Tags: fiscal stimulus
Milton Friedman is said to have mesmerised several countries with a flying visit!?
30 Sep 2016 Leave a comment
in business cycles, economic growth, macroeconomics, Milton Friedman, monetarism, monetary economics, politics - Australia Tags: central banks, conspiracy theories, lags on monetary policy, monetary policy, rules versus discretion, The fatal conceit, The pretense to knowledge
Milton Friedman visited Australia in 1975. He spoke with government officials and appeared on the TV show Monday Conference. Apparently, that was enough for him to take over Australian monetary policy setting for the foreseeable future.
When working at the next desk to the monetary policy section in the late 1980s, I heard not a word of Friedman’s Svengali influence:
- The market determined interest rates, not the reserve bank was the mantra for several years. Joan Robinson would be proud that her 1975 visit was still holding the reins.
- Monetary policy was targeting the current account. Read Edwards’ bio of Keating and his extracts from very Keynesian treasury briefings to Keating signed by David Morgan that reminded me of macro101.
See Ed Nelson’s (2005) Monetary Policy Neglect and the Great Inflation in Canada, Australia, and New Zealand who used contemporary news reports from 1970 to the early 1990s to uncover what was and was not ruling monetary policy. For example:
“As late as 1990, the governor of the Reserve Bank rejected central-bank inflation targeting as infeasible in Australia, and cited the need for other tools such as wages policy (AFR, October 18, 1990).”
Bernie Fraser was still sufficiently deprogrammed in 1993 to say that “…I am rather wary of inflation targets.” Easy to then announce one in the same speech when inflation was already 2-3%.
When as a commentator on a Treasury seminar paper in 1986, Peter Boxhall – fresh from the US and 1970s Chicago educated – suggested using monetary policy to reduce the inflation rate quickly to zero, David Morgan and Chris Higgins almost fell off their chairs. They had never heard of such radical ideas.
In their breathless protestations, neither were sufficiently in-tune with their Keynesian educations to remember the role of sticky wages or even the need for the monetary growth reductions to be gradual and, more importantly, credible as per Milton Freidman and as per Tom Sargent’s End of 4 big and two moderate inflations papers.
I was far too junior to point to this gap in their analytical memories about the role of sticky wages, and I was having far too much fun watching the intellectual cream of the Treasury senior management in full flight. At a much later meeting, another high flying deputy secretary was mystified as to why 18% mortgage rates were not reining in the current account in 1989.
Friedman’s Svengali influence did not extend to brainwashing in the monetarist creed that the lags on monetary policy were long and variable. The 1988 or 1989 budget papers put the lag on monetary policy at 1 year, which is short and rapier, if you ask me.
Utopia, you are standing in it! 
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